Bloomberg News

Colombian Currency Gains on Greek Austerity Vote, Trade Outlook

June 29, 2011

June 29 (Bloomberg) -- Colombia’s peso gained after the Greek parliament approved austerity measures needed to win European bailout funds and stave off default, boosting demand for higher-yielding, emerging-market assets.

The peso advanced 0.1 percent to 1,779.50 per dollar at 3:10 p.m. New York time, from 1,781.94 yesterday. The peso has gained 7.2 percent this year, the best performer among the six most-traded Latin American currencies tracked by Bloomberg.

“The mood in international markets is of lower risk aversion as we’re kind of absorbing the news from Greece,” said Daniel Lozano, an analyst at Bogota-based brokerage Serfinco SA. The peso also rose as the country advanced toward a trade agreement with the U.S., he said.

Greek Prime Minister George Papandreou clinched enough votes today to pass the first part of an austerity plan aimed at meeting European Union aid requirements. President Barack Obama won support of the largest U.S. business lobbying groups yesterday for his plan to attach aid for displaced workers to stalled trade deals with Colombia, South Korea, and Panama.

Finance Minister Juan Carlos Echeverry said today Colombia will continue to “combat” the peso’s appreciation.

In April, Echeverry announced that the government would create an overseas fund with as much as $1.2 billion from dollars bought in the local spot market through the end of 2011, and forgo repatriating funds from abroad for the rest of the year. That comes on top of the central bank’s plans to buy a minimum of $20 million daily until at least Sept. 30.

Echeverry also said today that Colombia may sell bonds in Asia this year or next. The government last sold bonds in Asia in 2009, when it issued 45 billion yen-denominated bonds ($556 million).

The yield on Colombia’s 10 percent bonds due July 2024 rose one basis point, or 0.01 percentage point, to 7.77 percent, according to Colombia’s stock exchange. The security’s price fell 0.092 centavo to 117.881 centavos per peso.

--Editors: Marie-France Han,

To contact the reporters on this story: Blake Schmidt in Bogota at bschmidt16@bloomberg.net; Andrea Jaramillo in Bogota at ajaramillo1@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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