The Colombian peso retreated for a third straight day Wednesday on speculation that the central bank may announce additional measures to rein in the currency in its monetary policy meeting scheduled for Friday.
The peso closed at COP1,806.5 to the dollar, slightly weaker than Tuesday’s rate of COP1,805. The central bank could announce additional measures Friday to rein in the currency, which has appreciated more than 13% this year.
Some investors have shown concern that Colombia could impose limited capital controls to cub the currency. Finance Minister Juan Carlos Echeverry said a few days ago that the government hasn’t examined capital controls as an option to curb the currency.
Imposing capital controls could work against the government’s goal of obtaining investment-grade status for its debt, said Andres Jimenez, an analyst with local brokerage Interbolsa S.A., in a note. Capital controls “are nonsense if we want investment grade in the future,” he said.
The central bank started buying $20 million daily last week in a bid to tame the currency. The central bank said it could increase those purchases, which will last a minimum of four months. On Wednesday the central bank bought $19.9 million at a price of COP1,803.7.
The IGBC stock index, meanwhile, dropped 0.53% to 14,170.36 points. The index was pushed down by Pacific Rubiales Energy, an oil firm also listed in Canada, which declined 1.86% to COP46,480.
The yield on the 2020 peso denominated benchmark bond stood at 7.273% from 7.210% on Tuesday. (Darcy Crowe / Dow Jones Newswires)