Colombia’s peso on Thursday fell for a second day on speculation the Central Bank will announce measures to stem the local currency’s rally at a meeting tomorrow.
The peso dropped 0.3% to 1,817.75 per U.S. dollar at 2:36PM New York time, from 1,811.75 yesterday. It has jumped 12.4% this year, the best performance among world currencies tracked by Bloomberg.
“There’s a lot of speculation on what measures may be announced” at the Central Bank’s monetary policy meeting tomorrow, said Daniel Lozano, an analyst at Medellin-based brokerage Serfinco SA.
President Juan Manuel Santos said last week the central bank is studying measures to ease the peso’s “worrisome” rally.
Policy makers may decide to restart daily dollar purchases that expired in June, Alberto Bernal, a fixed income analyst with Bulltick Capital Markets in Miami, wrote in a report today.
The central bank purchased $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.” Banco de la Republica will likely announce it will buy $50 million a day, Bernal predicts.
“The Central Bank is serious about the idea of implementing policies that will constrain the Colombian peso from appreciating significantly” beyond 1,900, Bernal wrote. Still, “dollar purchases will stabilize, but not reverse” the peso’s gains, he wrote.
The yield on the benchmark 11% bonds due 2020 rose one basis point, or 0.01 percentage point, to 7.16%, according to Colombia’s stock exchange. The bond’s price fell 0.120 centavo to 126.614 centavos per peso.
(Andrea Jaramillo / Bloomberg)