Colombia’s peso rose the most in two weeks after weaker-than-expected U.S. economic data led to increased speculation the Federal Reserve will follow through on its plan to buy $600 billion in government debt.
The peso slid 0.5 percent to 1,874.38 per U.S. dollar at 3:13 p.m. New York time, from 1,883.30 yesterday, for the biggest advance since Nov. 4. The peso has weakened 3.6 percent in the last three months, the worst performance among 25 emerging-market currencies tracked by Bloomberg.
The dollar fell against the euro after a U.S. government report showed October consumer prices excluding food and fuel had the lowest annual increase on record and housing starts dropped. The Fed said earlier this month it would pump more money into the world’s biggest economy to reduce unemployment and avert deflation.
“The data coming out of the U.S. isn’t good,” said Camilo Santana, an analyst at Bogota-based brokerage Cia. de Profesionales de Bolsa. “Investors are moving out of the dollar and into the euro and even emerging-market currencies.”
Eased concern on the European debt crisis helped boost demand for Colombia’s peso bonds, according to Daniel Lozano, an analyst at Medellin-based brokerage Serfinco SA.
Irish bonds rose after Finance Minister Brian Lenihan said potential aid talks on the country’s banks with the European Commission, the European Central Bank and the International Monetary Fund start tomorrow.
The yield on the Colombia’s benchmark 11 percent bonds due 2020 fell 14 basis points, or 0.14 percentage point, to 7.27 percent, according to Colombia’s stock exchange. The bond’s price jumped 1.099 centavo to 125.217 centavos per peso.
The yield on the securities maturing in July 2020 yesterday increased to 7.41 percent, the highest level since Sept. 10. The bonds became “very attractive” after yields rose above 7.40 percent, Lozano said.
“The movements we had seen in the past few days were exaggerated,” said Lozano. “Inflation is under control so there are no local fundamentals that support those losses.”
Colombia’s annual inflation slowed in October to 2.33 percent, within the central bank’s target this year between 2 percent to 4 percent. (Andrea Jaramillo / Bloomberg)