Colombia’s peso fell for the first time in six days on speculation the government will take further measures to ease the currency’s world-beating rally after President Juan Manuel Santos called a meeting to discuss options to stem the currency’s gains.
The peso declined 0.2 percent to 1,789.93 per dollar at 3:31 p.m. New York time, from 1,786.5 yesterday. It’s up 14.2 percent this year, the best performance among all currencies tracked by Bloomberg.
Santos will meet with government officials tomorrow to analyze options to stem gains in the peso, said a Finance Ministry official who declined to be identified in accordance with government policy. Finance Minister Juan Carlos Echeverry will attend the meeting, the official said.
“The meeting would send a political signal and the market is reacting to that,” said Daniel Lozano, an analyst at Medellin-based brokerage Serfinco SA.
Colombia’s central bank said Sept. 15 it will buy a minimum of $20 million daily for at least four months, heeding a call from Santos who asked policy makers in August to take “bold and creative” action to ease the peso’s rally. Banco de la Republica said yesterday it bought $240 million in the currency market last month.
Still, “the peso is following a global trend and there is little Banco de la Republica can do to fight it,” said Lozano. “The most it can do is take measures that ease the pace of gains.”
A group of Colombian business associations including ANDI, the country’s biggest, asked the government and central bank to take further measures to ease the peso’s rally which “has reached a point where it jeopardizes the Colombian economy’s positive outlook,” according to a copy of the letter sent by e- mail yesterday.
Among the measures, the business groups ask that officials impose capital controls and increase dollar purchases in the currency market.
Primera Pagina news service reported that Santos has also invited former Argentine economy minister Domingo Cavallo and ex-Peruvian prime minister Pedro-Pablo Kuczynski to the meeting to offer advice. The Finance Ministry official contacted by Bloomberg News said he didn’t know whether they would attend.
The yield on the nation’s benchmark 11 percent bonds due 2020 rose four basis points, or 0.04 percentage point, to 7.03 percent, according to Colombia’s stock exchange. The bond’s price fell 0.366 centavo to 127.351 centavos per peso.
(Andrea Jaramillo, Bloomberg)
