Colombia’s peso on Thursday jumped the most in seven months on speculation dollar flows into the South American nation will rise after the European Central Bank delayed its withdrawal of emergency liquidity measures.
The peso climbed 1.4 percent to 1,906.20 per U.S. dollar at 1:43 p.m. New York time, from 1,932.50 yesterday. That’s its biggest gain since May 10.
ECB President Jean-Claude Trichet pledged to fight “acute” financial market tensions and said the bank will keep offering lenders as much cash as they want through the first quarter over periods of up to three months at a fixed interest rate. The ECB is facing calls to devise new crisis measures amid concern that contagion from the euro region’s sovereign debt crisis will spread to Spain.
“An extension of the help from the ECB boils down to more money going into emerging markets as investors seek higher returns,” said Julian Cardenas, head analyst at Bogota-based brokerage Corredores Asociados SA.
Colombia’s peso bonds also gained amid higher appetite for risk, according to Cardenas.
The yield on the government’s benchmark 11 percent bonds due 2020 fell 7 basis points, or 0.07 percentage point, to 7.44 percent, according to Colombia’s stock exchange. The bond’s price rose 0.497 centavo to 123.839 centavos per peso. (Andrea Jaramillo / Bloomberg)