Colombia’s peso fell the most in a month on Wednesday morning after the central bank said it would buy “at least” $20 million a day to stem a rally that has made the currency the world’s biggest gainer this year.
The currency slid 1 percent to 1,808.85 per dollar at 9:52 a.m. New York time from 1,790.35 yesterday. Earlier, it earlier fell 1.3 percent, the biggest drop since Aug. 12. The decline pares the peso’s jump this year to 12.9 percent, still the best performance among all currencies tracked by Bloomberg.
The central bank plans to buy dollars daily “for at least four months” starting today to bolster foreign reserves, according to a statement on its website. Central bank chief Jose Dario Uribe said Aug. 20 that the bank would make the purchases to ease gains in the peso when “appropriate,” heeding a call from President Juan Manuel Santos last month for policymakers to take “bold and creative” action.
Banco de la Republica “finally announced an intervention and that’s pushing declines in the peso,” said Daniel Velandia, head analyst at Bogota-based brokerage Correval SA. “Now it becomes a game with the market to see how much the central bank buys. Depending on how aggressive it is, if it buys more than $20 million, we will see a weaker peso.”
With today’s announcement the central bank resumed daily dollar purchases that began this year. It acquired $20 million a day between March 3 and June 30, or $1.6 billion in total, to curb a rally policy makers said left the peso “misaligned.” (Andrea Amarillo / Bloomberg)