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Colombia’s peso fell to the lowest in almost three weeks as signs the economy is slowing and concern European leaders will fail to tame the region’s debt crisis damped demand for the South American country’s assets.
The peso depreciated 0.6 percent to 1,802.63 per dollar after touching 1,807.45, the lowest since June 5. The decline pared this year’s advance to 7.5 percent, still the best performance among all currencies tracked by Bloomberg.
“Investors are seeking the U.S. dollar as a refuge amid the uncertainty surrounding Europe,” said Diana Guiza, an analyst at Bogota-based brokerage Corredores Asociados SA. “Internal dynamics are leading many to revise their growth forecasts down and that’s also helping push declines in the peso.”
Guiza said Corredores Asociados will likely lower its 4.9 percent growth forecast for this year after government reports last week showed industrial output and retail sales unexpectedly fell in April and the economy expanded at its slowest pace since 2010 in the first quarter.
Billionaire investor George Soros said yesterday the euro may dissolve if European Union leaders fail to curb the debt crisis at a June 28-29 summit. Europe should start a fund to purchase Italian and Spanish bonds in return for budget cuts in those countries, Soros said in an interview. German Chancellor Angela Merkel rejected joint euro-area bonds or bills, saying that introducing shared debt now would be “counterproductive.”
Colombian President Juan Manuel Santos called an extraordinary session of Congress for June 27 and 28 to discuss the government’s objections to changes to the Constitution affecting the justice system, according to a statement late yesterday from his office. Justice Minister Juan Carlos Esguerra resigned last week over the changes that could paralyze investigations into politicians with links to illegal paramilitary groups.
The yield on Colombia’s 10 percent peso-denominated debt due in July 2024 fell four basis points, or 0.04 percentage point, to 6.97 percent, according to the central bank. That’s its lowest level on a closing basis since the securities were first issued in 2009. The price rose 0.326 centavo to 124.145 centavos per peso.
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