COLOMBIA NEWS – (Bloomberg) Colombia’s peso dropped the most since February and bonds slid on speculation that changes the government is planning on how it measures pension fund returns will lead to increased demand for dollar assets.
The peso fell 1.2 percent to 1,881.10 per dollar at the close in Bogota, its steepest drop since Feb. 3. The price on Colombia’s benchmark peso debt maturing in 2024 dropped 1.42 centavos to 123.63 centavos per peso, according to data from the central bank. The yield rose 17 basis points, or 0.17 percentage point, to 6.68 percent, the biggest increase in a month.
Colombia will publish in about two weeks recommendations from a group of experts for changes on the way pension funds’ minimum returns are measured, Deputy Finance Minister Andres Restrepo said yesterday. The government isn’t targeting an exchange-rate level, and there’s no discussion over forcing investment in a determined asset, Restrepo said.
“Uncertainty over the details should induce volatility in the next two weeks since investors will operate under the presumption that the changes in the portfolio rules may lead to increased investment in foreign assets,” Gustavo Arteta, a currency strategist at UBS AG, wrote in report.
Today’s drop in the peso pared its gain in the past three months to 2.9 percent, still the best performance among 24 emerging-market currencies tracked by Bloomberg.
The peso also weakened today as data showing the U.S. economy grew more than expected boosted speculation that the Federal Reserve will start raising borrowing costs by the middle of next year.