Colombia’s peso gained the most in almost six weeks after the U.S. government said it will guarantee $306 billion of troubled Citigroup Inc. assets.
"The market had been hanging on the edge, waiting for the announcement on Citigroup that finally came this weekend," said Flavia Cattan-Naslausky, a currency strategist at RBS Greenwich Capital in Greenwich, Connecticut.
Colombia’s peso advanced 2.1 percent to 2,313.6 per dollar at 2:35 p.m. New York time, from 2,362.5 on Nov. 21, according to the Colombian foreign-exchange electronic transactions system, known as SET-FX.
In addition to U.S. government guarantees, Citigroup will get $20 billion in a cash injection from the Treasury, adding to $25 billion the company received last month under the Troubled Asset Relief Program.
The yield on the Colombia’s benchmark 11 percent bonds due in July 2020 fell 14 basis points, or 0.14 percentage point, to 12.60 percent, according to Colombia’s stock exchange. The price rose 0.766 centavo to 90.338 centavos per peso.
Cattan-Naslausky forecasts emerging-market currencies will extend their trend of weakness.
"This should be seen more as a bear rally as it offers
investors the opportunity to pare back risk," she said. "The
longer-term outlook is still one-way for riskier, emerging-market assets." (Bloomberg)
