Colombia’s peso fell the most in
five months after U.S. President Barack Obama said General
Motors Corp. and Chrysler LLC must survive without becoming
wards of the state, hurting appetite for emerging-market assets.
The peso has weakened 0.6 percent this month and 12 percent
in 2009. A government report last week showed the economy
unexpectedly contracted for the first time since 1999 in the
final three months of 2008, shrinking 0.7 percent.
“We’re seeing the worst of both worlds,” said Julian
Cardenas, an analyst at Bogota-based brokerage Corredores
Asociados. “We continue to see a deterioration of the U.S.
economy and now we see the same for Colombia with the added
concern the government’s measures aren’t enough” to address the
Colombia’s peso slid the most since Oct. 22, declining 2.6
percent to 2,557.77 per dollar at 12:32 p.m. New York time, from
2,492.55 on March 27. It earlier touched 2,579, its weakest
level since March 5.
Colombia’s central bank chief Jose Dario Uribe said
yesterday the economy will shrink in the first quarter before
showing an overall expansion for 2009. Cardenas predicts the
economy will grow 1.3 percent this year.
The unexpected economic contraction led the government last
week to raise its budget deficit target to 2.3 percent from 1.8
percent. Last year the deficit was 0.1 percent.
The yield on Colombia’s 11 percent bonds due in July 2020
rose 10 basis points, or 0.1 percentage point, to 9.79 percent,
according to Colombia’s stock exchange. The bond’s price plunged
0.711 centavo per peso to 107.952 centavos. It earlier touched
107.396, its lowest since Feb. 25.