Dec. 27 (Bloomberg) -- Colombia’s peso rose to a five-week high on speculation economic growth will draw more foreign investment to the South American country next year.
The peso touched 1,913.98 per U.S. dollar, the strongest intraday level since Nov. 18. It closed little changed today at 1,922.50, from 1,923 yesterday.
“Colombia’s good fundamentals point to a stronger peso next year as the country attracts investment from abroad,” said Francisco Chaves, a fixed-income analyst at brokerage Corredores Asociados in Bogota.
The economy probably expanded more than 5.5 percent this year, fueled by a surge in spending on infrastructure and a record $13 billion in foreign direct investment, President Juan Manuel Santos said yesterday. That tops the average for Latin America, which is forecast to grow 4.4 percent this year, according to a Dec. 21 report by the United Nations Economic Commission for Latin America. Colombia will grow 4.5 percent next year, more than the region’s 3.7 percent estimated pace for 2012, according to the report.
The currency also gained today as investors closed out bets for a drop, Chaves said. Increased dollar holdings at Colombian banks this year have helped the peso avoid the kind of declines it posted at the end of 2010, he said.
The central bank’s daily dollar purchases last year depleted cash holdings of the U.S. currency in local banks, sinking the peso to a seven-month low of 2,027.5 on Dec. 28, 2010.
“Investors were betting on a weaker peso at the end of the year and since that didn’t happen they are purchasing pesos, betting on gains next year,” he said.
The yield on the nation’s 10 percent bonds due in July 2024 fell one basis point, or 0.01 percentage point, to 7.63 percent, according to the stock exchange. The bond’s price rose 0.087 centavo to 118.648 centavos per peso.
--Editors: Richard Richtmyer, Brendan Walsh
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