Bloomberg News

Colombian Peso Falls for Second Day on Currency Measure Bets

February 22, 2012

Feb. 22 (Bloomberg) -- Colombia’s peso fell for a second day on speculation the central bank will take further measures to ease gains in the local currency.

The peso weakened 0.2 percent to 1,782.01 per U.S. dollar, from 1,778.35 yesterday. It touched 1,770 on Feb. 9, its strongest intraday level since August. The peso has jumped 7.7 percent in the last three months, the third-best performance after the Mexican peso and South African rand among 25 emerging- market currencies tracked by Bloomberg.

Concern about global growth also reduced demand today for higher-yielding assets, including the Colombian peso, according to Juan Camilo Santana, an analyst at Cia. de Profesionales de Bolsa SA brokerage in Bogota.

“The market is awaiting what comes out of the central bank’s meeting” on Feb. 24, said Santana. “If they do raise interest rates, some are predicting other measures to help stem the peso’s rally.”

The central bank began on Feb. 6 to buy a minimum of $20 million daily in the currency market, which is scheduled to continue for at least three months.

Banco de la Republica will raise its overnight lending rate a quarter percentage point to 5.25 percent in this week’s meeting, according to 14 of 25 economists surveyed by Bloomberg. Eleven analysts estimate the rate will remain unchanged at 5 percent.

European services and manufacturing output shrank in February as the euro-area economy struggled to rebound from a contraction in the fourth quarter. A separate report showed Chinese manufacturing may shrink a fourth straight month in February.

Bond Yields Drop

The yield on the government’s 10 percent peso bonds due July 2024 fell three basis points, or 0.03 percentage point, to 7.38 percent, according to the central bank. The price rose 0.243 centavo to 120.749 centavos per peso.

Yields on Colombian peso bonds due August 2026 fell to 7.61 percent at a government auction of fixed-rate securities today, from 7.62 percent at the last auction on Feb. 8. Colombia also sold debt due October 2018 to yield 6.93 percent, up from 6.89 percent in the previous auction, while the yield on the October 2015 securities rose to 6.6 percent from 6.42 percent, the Finance Ministry said in a statement.

--Editors: Glenn J. Kalinoski, Richard Richtmyer

To contact the reporter on this story: 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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