The Colombian peso strengthened against the dollar to a two-month record on Thursday on the rising flow of foreign direct investment.
The peso closed at 1,925.95 Colombian pesos to the dollar on Thursday from COP1,942 on Wednesday. The peso hadn’t closed that strong since April 8, when it had ended at COP1,922.75.
The peso Thursday followed the Brazilian real, which also got stronger. But the demand for peso is a not a one-day event since demand is rising as foreigners are eager to invest in Colombia, said David Aldana, a market analyst with local brokerage Ultrabursatiles.
“There is a strong flow of dollars into Colombia as foreign direct investment is rising, as is foreign appetite for stocks and bonds,” Aldana said.
Additionally, the Colombian government, which has borrowed a lot abroad, will need to change those dollars into pesos to pay for its local bills and investors are anticipating the government sales, Aldana said.
On the equity market, the IGBC stock index ended almost unchanged, at 12,273.20 points. The Colcap index rose 0.1% to 1,446.34 points.
The most-traded stock was oil company Pacific Rubiales Energy, which rose 1.6% to COP41,500. Preferred shares of the country’s largest bank, Bancolombia SA, fell 1.5% to COP23,420.
The yield on the benchmark Colombian peso-denominated government bond, or TES, maturing in 2020, fell to 7.932% from 7.95% on Wednesday. (Inti Landauro / Dow Jones)