Colombia’s peso fell near its lowest
level in more than two years after the central bank last week cut
its lending rate by an unexpected full percentage point.
Banco de la Republica on February 27 lowered its overnight
lending rate to 8 percent from 9 percent as policy makers battle
slumping economic growth. The move, which was announced after
markets closed, was forecast by only one of 35 economists
surveyed by Bloomberg News.
The peso tumbled the most in almost two weeks, weakening 2
percent to 2,594 per dollar at 8:58 a.m. New York time, from
2,554 on Feb. 27, according to the Colombian foreign-exchange
electronic transactions system, known as SET-FX. The currency on
Feb. 24 touched 2,610, its lowest level since June 2006. The peso
has plunged 13 percent this year, the biggest drop among the six
most traded currencies in Latin America.
The yield on Colombia’s 11 percent bonds due in July 2020
rose eight basis points, or 0.08 percentage point, to 9.63
percent, according to Colombia’s stock exchange. The bond’s price
fell 0.577 centavo to 109.114 centavos per peso.