The Colombian peso weakened to COP2,020 against the dollar on Thursday, from COP2003.80 at Wednesday’s close, as the dollar firmed against its major rivals.
The Colombian central bank’s announcement in October that it would buy dollars to halt the rise of the peso continues to affect market psychology.
“There is an asymmetry in the way the market is moving,” said Daniel Lozano, an analyst at local brokerage Profesionales de Bolsa. “The peso can fall very easily, but when it rises the central bank has a credible threat to intervene in the market, and people prefer to stay out rather than risk important losses.”
Despite declines on Wall Street and major European markets, Colombia’s benchmark IGBC stock index rose slightly to hit a record high for the third successive day. The index closed up 0.17% at 11,703.47.
The IGBC index is up about 55% so far this year.
“I don’t think it’s a bubble at all,” said Rupert Stebbings, a market analyst with local brokerage Interbolsa. “We are moving up in line with the rest of the region. In terms of overall sentiment, money is coming into emerging markets and especially Latin America. And you have growing pension fund participation here.”
In the debt market, the yield on Colombia’s benchmark peso-denominated bond maturing in 2020 fell to 8.3% from 8.323% at Wednesday’s close. Most market analysts surveyed by Dow Jones expect the central bank to leave interest rates unchanged when its board meets Friday.