The Colombian peso slid to a two-week
low as investors shunned higher-yielding, emerging-markets assets
on pessimism about the global economy.
The peso fell as much as 0.9 percent as oil, Colombia’s
biggest export, plunged after OPEC said that demand for its crude
will decline 4.2 percent this year as the recession in the U.S.,
Europe and Japan curbs fuel use. Oil futures are down 62 percent
from a year ago.
Colombia’s currency declined 0.3 percent to 2,246.2 per
dollar at 2:23 p.m. New York time, from 2,239.7 yesterday,
according to the Colombian foreign-exchange electronic
transactions system, known as SET-FX. The peso touched 2,259.8,
the weakest since Dec. 30.
Sharp declines this week in global equity markets have
fueled investor flight from Latin America, weakening currencies
in the region, said Benito Berber, an economist at RBS Greenwich
Capital Markets in Greenwich, Connecticut.
“Colombia is not going to do very well this year,” he
said. Berber forecasts economic growth of 0.5 percent this year
as the government has less flexibility to offer a stimulus
package on the scale that countries such as Chile are planning.
The Colombian peso may underperform regional currencies in
2009, Berber and Latin America currency strategist Flavia Cattan-
Naslausky wrote in a report published yesterday. They forecast
the currency will weaken to 2,550 by year-end.
“Pressure on the Colombian peso will come from a sharp
reduction in commodity prices and concomitant reduction in
longer-term foreign direct investment flows,” Berber and Cattan-
Naslausky wrote.
The yield on the nation’s benchmark 11 percent bonds due in
July 2020 rose 14 basis points, or 0.14 percentage point, to
10.06 percent, according to Colombia’s stock exchange. The price
fell 0.988 centavo to 106.115 centavos per peso. (Bloomberg)