The peso sank as much as 2.5 percent after U.S. lawmakers
late yesterday met to consider revisions to Treasury Secretary
Henry Paulson’s $700 billion plan to rescue financial firms
saddled by mortgage-loan losses. The peso has dropped 5 percent
over the past two days, leading declines in most Latin American
currencies.
“People are a little worried about the bailout because
there is a lot of haggling,” said Win Thin, a senior currency
strategist at Brown Brothers Harriman & Co. in New York. “Some
of the politicians are a little reluctant to hand over a $700
billion blank check to Paulson.”
The peso was down 2.1 percent to 2,150 per dollar at 11:51
a.m. in New York, from 2,106.5 yesterday, according to the
Colombian foreign-exchange electronic transactions system, known
as SET-FX. The two-day slide pares much of the peso’s 6.7 percent
surge on Sept. 19, gains that were sparked by Paulson’s initial
presentation of the bailout plan.
“We had this nice relief rally on the bailout package, but
my feeling is that these next few months are not conducive to
investing in emerging-market securities,” Thin said.
The yield on Colombia’s benchmark 11 percent bonds due in
July 2020 rose 4 basis points, or 0.04 percentage point, to 12.17
percent, according to Colombia’s stock exchange. The bond’s price
fell 0.23 centavo to 92.77 centavos per peso. (Bloomberg)
