The Colombian peso has dropped to a three-month low due to European economic uncertainty, reports Businessweek.
Concerns that Greece’s debt crisis could spread to other indebted nations have curbed demand for higher-yielding emerging-market assets.
It is the third day that the peso has slid. Today it fell by 0.5% against the dollar to COP1,996.58 per dollar, the weakest it has been since February 8.
Fears have been growing in Europe as Portugal’s credit rating is on review by Moody’s Investors Service. Portugal has a substantial budget deficit.
“There’s a lot of uncertainty with what can happen in Europe, so investors are dropping emerging-market assets and seeking refuge in U.S. Treasuries,” explained Camilo Forero of brokerage Cia. Profesionales de Bolsa.
Another factor leading to a weaker peso was the unexpected lowering of the lending rate by half a percentage point to a record-low of 3%, reducing the appeal of Colombia’s financial assets.