Rising prices of oil and other basic goods such as wheat are feeding into expectations the central bank will raise rates this week,” Alvaro Camaro, chief analyst at Stanford Financial Group’s unit in Bogota told Bloomberg.The peso gained 1.4 percent to 1,678 per U.S. dollar at 4:01 p.m. New York time, from 1,702.2 on June 13, according to the Colombian foreign-exchange electronic transactions system, SET-FX. It earlier touched 1,675.15 per dollar, its strongest since June 1999.Increased foreign direct investment and the widening gap between Colombian and U.S. benchmark interest rates have fueled an 18.2 percent rally in the peso this year, the biggest advance among 26 emerging-market currencies tracked by Bloomberg. The 7.75 percentage point difference between Colombian and U.S. benchmark rates is the widest since July 2001.Banco de la Republica will increase its overnight lending rate by a quarter-percentage point to 10 percent on June 20, according to 10 of 18 economists surveyed by Bloomberg. The other eight analysts forecast policy makers will leave the rate unchanged at 9.75 percent, its highest level since August 2001.
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