By Nathan Gill
Sept. 25 (Bloomberg) -- Colombia’s peso climbed for a fourth week on speculation the South American country is beginning to recover from its first recession since 1998.
The peso climbed 1.3 percent this week to 1924.45 per dollar, extending its advance this month to 7 percent, the biggest gain among 26 emerging-market currencies. It rose 0.2 percent on the day from 1927.82 yesterday. The peso is up 4.9 for the month, the best performer against the dollar among six major Latin American currencies tracked by Bloomberg.
The economy will expand 1 percent in the second half of 2009, rebounding from contractions in the first two quarters, Finance Minister Oscar Ivan Zuluaga said yesterday. Juan Mauricio Ramirez, Colombia’s acting national planning director, said yesterday the economy will expand 0.5 percent to 1.5 percent this year, matching previous forecasts.
“Expectations in the country’s economy are positive,” Juan Pablo Vieira, a currency trader at Interbolsa SA in Bogota, said today in a telephone interview. “The market expects the Colombian peso to stay strong over the next few days.”
Central Bank Rate Cut
Colombia’s central bank unexpectedly cut its benchmark interest rate for the first time in three months as policy makers seek to boost the economy as inflation remains below target. The seven-member board, led by bank chief Jose Dario Uribe, reduced the interbank rate to 4.00 percent today, surprising all 27 economists surveyed by Bloomberg.
The yield on Colombia’s 11 percent bonds due in July 2020 fell to 9.130 percent from 9.148 percent yesterday, according to Colombia’s stock exchange. The yield has declined 1.57 percentage points from 10.70 percent since Dec. 30, 2008, according to the stock exchange.
In Argentina, the peso was unchanged at 3.8414 per dollar. The yield on the country’s inflation-linked peso bonds due in December 2033 climbed 2 basis points to 11.60 percent, according to Citigroup Inc.’s local unit.
Chile’s peso dropped 0.4 percent to 545.86 per dollar from 543.85 yesterday. The yield for a basket of Chile’s 10-year peso bonds in inflation-linked currency units, called unidades de fomento, gained 0.4 percent to 2.76 percent, the most since Sept. 10, according to Bloomberg composite prices.
Peru’s sol slid for a second day, losing 0.2 percent to 2.8820 per dollar, from 2.8760 yesterday. The yield on the country’s 8.6 percent sol-denominated bond due August 2017 fell one basis point to 4.93 percent, according to Citigroup.
Venezuela’s bolivar rose 0.7 percent to 5.63 per dollar in unregulated parallel market trading from 5.67 yesterday, traders said. Venezuelans buy dollars in the parallel market when they can’t get government authorization to purchase them at the official exchange rate of 2.15 per dollar.