Colombia’s peso posted its biggest weekly decline in four months as speculation mounted that policy makers will take additional measures to stem what had been the region’s biggest rally this year.
The peso declined 1.6 percent this week, the most since the five days ended Nov. 25. The losses cut into an advance this year that had reached 10 percent through last week, more than all other major currencies in Latin America. It was little changed today, rising 0.2 percent to 1,788.75.
Investors are anticipating Colombian policy makers will take more steps to weaken the currency after Finance Minister Juan Carlos Echeverry told reporters March 28 that the central bank should consider boosting dollar purchases and study possible “surprise” moves to halt the peso’s advance.
The currency weakened after Echeverry said he backed more aggressive actions, leading investors who were long the peso to close their positions, said Juan Nicolas Garcia, a currency trader at HSBC Holdings Plc’s Colombia unit. “There were big bets in the market for the peso to break 1,750,” he said.
An exchange rate of 1,700-to-1,750 pesos per dollar is “tough” for exporters, Echeverry said in a speech on March 28 at the nation’s Senate.
The yield on Colombia’s 10 percent peso-denominated bonds due in 2024 fell one basis point, or 0.01 percentage point,to 7.25 percent in Bogota, according to the central bank.
To contact the reporter on this story: Christine Jenkins in New York at email@example.com
To contact the editor responsible for this story: David Papadopoulos at firstname.lastname@example.org