Thursday, February 2, 2023

Colombian Peso Falls as Government Buys Dollars to Ease Rally

Colombia’s peso dropped to its lowest level in two months after Finance Minister Juan Carlos Echeverry said the Treasury will buy $300 million this week to curb the currency’s rally.

The peso slid 0.8 percent to 1,817.80 per U.S. dollar after earlier touching 1,821.76, the weakest level since June 4. It has rallied 6.6 percent this year, the best performance in the world after the Chilean peso and the Hungarian forint among currencies tracked by Bloomberg.

Echeverry’s announcement after the close of trading yesterday follows earlier comments in which he urged an increase in minimum daily dollar purchases from $20 million, saying a strengthening peso threatens to undermine local industry and farmers. Central bank co-director Cesar Vallejo said in an interview earlier this week that policy makers are considering doubling daily purchases to $40 million.

- Advertisement -

“After so much intervention talk, the government is finally moving from rhetoric to action,” said Juan Nicolas Garcia, a currency trader at HSBC Colombia.

Speaking to reporters today, Echeverry said the Treasury will continue to buy dollars as long as it has “ammunition.”

Citigroup Inc. recommended in a research note that clients take bets that the peso will fall against the dollar. The peso may weaken to as low as 1,850 per dollar, Citigroup said.

Standard & Poor’s said in a statement today that it may raise Colombia’s foreign debt rating as economic growth in the Andean country increases revenue and leads to lower debt levels. S&P rates Colombia BBB-, the lowest level of investment grade. The outlook was moved to positive from stable, it said.

- Advertisement -

The announcement came after the close of Colombia’s bond and currency market.

Peso bonds in the long end of the curve may gain tomorrow following S&P’s announcement, Alianza Valores brokerage wrote in a note to clients.

The yield on Colombia’s 10 percent peso-denominated debt due in July 2024 closed little changed at 6.64 percent. It fell to 6.60 percent on Aug. 2, the lowest on a closing basis since the securities were first issued in 2009.

- Advertisement -

FACT CHECK:
We strive for accuracy in its reports. But if you see something that doesn't look right, send us an email. The Q reviews and updates its content regularly to ensure it's accuracy.

Rico
Rico
"Rico" is the crazy mind behind the Q media websites, a series of onlinemagazines that includes TodayColombia.com. Rico brings his special kind of savvy to online marketing. His websites are engaging, provocative, informative and sometimes off the wall, where you either like or you leave it. The same goes for him, like him or leave him.There is no middle ground. No compromises, only a passion to present reality as he sees it!

Related Articles

Colombia has one of the lowest minimum wages in Latin America

QCOLOMBIA - 2023 starts and with it many of the workers...

Colombia and Venezuela reopen border crossing after 7 years

QCOLOMBIA - Colombia and Venezuela on Monday, September 26, 2022, reopened...
- paying the bills -

MOST READ

- paying the bills -

WANT TO STAY UP TO DATE WITH THE LATEST!

Get our daily newsletter with the latest posts directly in your mailbox. Click on the subscribe and fill out the form. It's that simple!