The Colombian peso weakened to COP1951.90 against the dollar Monday, from COP1,946.00 at Friday’s close, on nervousness about the upcoming presidential elections, and as the U.S. government’s lawsuit against Goldman Sachs alleging securities fraud reduced investors’ appetite for risk.
“The dollar strengthened mainly due to the uncertainty that the Goldman Sachs charge generated,” said Felipe Hernandez, an analyst with the local unit of Santander. “That was the main news, here in Colombia no new important data has come out.”
Rupert Stebbings, an analyst with local brokerage Interbolsa, said that Colombian politics could also be spooking the currency markets, as support for maverick Green Party presidential candidate Antanas Mockus has soared in recent weeks, making him the second-favorite to win the presidency in May elections.
“I am starting to suspect that the market is beginning to get nervous about Antanas Mockus,” Stebbings said in a report.
Until recently, it appeared almost certain that Colombians would elect one of the candidates most closely associated with the policies of outgoing President Alvaro Uribe.
The yield on the benchmark peso-denominated bond maturing in 2020 fell to 8.319%, from 8.365%.
“Yields have continued to fall in line with lower inflation expectations,” said Hernandez of Santander. “This also implies a change in the expectations about when and by how much the central bank will raise interest rates,” Hernandez added.
The IGBC stock index fell 0.6% to 12,289.67 points, led by Grupo de Inversiones Suramericana, which closed 1% lower at COP28,820. The Colcap index, which includes Colombia’s largest companies by market capitalization, fell 0.7% to 1,453.14 points. (Matthew Bristow / Dow Jones)