Bloomberg News

Colombia’s Peso Falls After Santos Says Currency Is Too Strong

May 15, 2012

Colombia’s peso fell for a second day after talks to form a Greek government failed and the South American country’s president said the currency is too strong.

The peso slipped 0.8 percent to 1,786.20 per U.S. dollar, from 1,771.50 yesterday, paring its rally this year to 8.5 percent, still the best performance among all currencies tracked by Bloomberg.

The Colombian currency has strengthened “more than it should,” President Juan Manuel Santos said in an interview today on Caracol Radio. “Banco de la Republica is intervening. I hope the peso stabilizes because it’s an important factor.”

Agriculture Minister Juan Camilo Restrepo said yesterday the central bank should adopt “stronger” measures to ease the peso’s rally to help exporters as a free-trade agreement with the U.S. goes into effect today. Santos’s comments came as Greece officials announced the country will hold new elections after President Karolos Papoulias failed to broker a governing coalition, raising concern it may exit the euro.

“Under a scenario of nervousness in international markets, pessimism starts to prevail,” said Camilo Perez, the head analyst at Banco de Bogota, the nation’s second-biggest bank. “Not only are people talking about Greece, but renewed concern over global growth is also a factor” that is hurting appetite for risk, Perez said.

To ease gains in the peso, the central bank said April 30 it will buy a minimum of $20 million daily in the spot market until at least Nov. 2, extending the program by three months.

The yield on Colombia’s 10 percent peso-denominated debt due in July 2024 was little changed at 7.18 percent, according to the central bank.

Investors were little shaken by a bomb blast in central Bogota today that injured Colombia’s former Justice Minister Fernando Londono and killed five people, according to Perez.

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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