Colombian stocks surged nearly 1% Tuesday on higher oil prices, while the peso appreciated against the dollar after retreating for two straight days.
The Colcap index, the benchmark for the Colombia’s most actively traded shares, is up nearly 1% in midday trading to 1593.42 points. The gains are being led by Pacific Rubiales Energy, a Canadian-based oil firm and Colombia’s largest private crude producers. Shares of Pacific Rubiales are up 4.31% to COP41,180.
Shares of Ecopetrol SA, Colombia’s state-run oil firm, rise 1.47% to COP4,480.
Light, sweet crude for February delivery recently gained $1.55, or 1.6%, to $100.25 a barrel on the New York Mercantile Exchange. Oil prices jumped after China published better-than-expected economic growth figures for the fourth quarter, boosting for higher crude demand.
For Colombia, which is close to producing 1 million barrels of oil per day, the higher demand for crude is also a factor driving the peso’s appreciation. The peso trades Tuesday at COP1,836.25 to the dollar from COP1,846.00 a day earlier.
“We are seeing an absence of negative news from Europe and that is calming investors and helping the peso strength,” said Camilo Perez, head of economic research at Banco de Bogota.
The central bank ended in November a dollar-buying program for $20 million daily that served to absorb dollars from the local spot market and helped limit the peso’s strength. The central bank replaced it with a plan to buy or sell foreign-exchange options if the exchange rate moves more than 5% from a 20-day moving average. The bank hasn’t yet been forced to step in.
“At this point we don’t expect the central bank to change its intervention plan,” Perez said. “Exporters and the government are still comfortable with the peso at this level,” he added.