Colombia’s peso led a decline in
Latin American currencies on concern the U.S. Congress will delay
approval of a financial industry bailout plan, curbing demand for
higher-yielding assets.
“All eyes are on what will happen to the bailout plan,”
said David Santos, head analyst at Bogota-based brokerage
Serfinco SA. “We will likely continue to see market volatility
in coming weeks.”
The peso dropped the most in two months, falling 3.1 percent
to 2,106.5 per dollar at 6:26 p.m. in New York, from 2,043.25
yesterday, according to the Colombian foreign-exchange electronic
transactions system, known as SET-FX. The slide ended a three-day
run-up.
U.S. officials have proposed taking troubled assets off the
balance sheets of financial institutions to end the worst credit
crisis since the Great Depression. Federal Reserve Chairman Ben
S. Bernanke and Treasury Secretary Henry Paulson warned lawmakers
today that failure to pass the $700 billion rescue plan would
threaten markets and the U.S. economy.
Colombia’s peso bonds fell for a second day. The government
cut its forecast yesterday for economic growth this year after a
report showed gross domestic product expanded at the slowest pace
since 2005 in the second quarter.
The yield on Colombia’s benchmark 11 percent bonds due in
July 2020 rose 15 basis points, or 0.15 percentage point, to
12.13 percent, according to Colombia’s stock exchange. The bond’s
price fell 0.879 centavo to 93 centavos per peso. (Bloomberg)