Colombian Peso Weakens For 2nd Day On Ctrl Bk Plan To Buy Dlrs

Colombian Peso Weakens For 2nd Day On Ctrl Bk Plan To Buy Dlrs

BOGOTA (Dow Jones)--The Colombian peso weakened for a second day following the central bank's announcement Friday that it will start buying dollars and local government bonds.

The peso depreciated to 1,983 pesos to the dollar from COP1,950 on Monday. The peso hasn't closed that weak since Sept. 14, when it ended at COP1,997. The peso has weakened 3.3% since Friday.

The central bank said it will spend as much as COP3 trillion to buy pesos and peso-denominated government bonds, or TES. It didn't provide further details.

The bank made the announcement after the government said it wanted the peso, which had appreciated more than 20% since the beginning of the year, to weaken.

"Monday, the peso followed other currencies such as the Brazilian real that weakened against the dollar. Today, though, it's clearly because of the central bank decision," said Ricardo Perez, a market analyst with local brokerage Alianza Valores.

Perez attributed 60 out of the 80 pesos the Colombian currency has lost against the dollar since Thursday to the international market and 20 pesos to the Colombian central bank.

On the equity market, the IGBC benchmark stock index fell 0.8% to 10,808.19, while the Colcap index, which includes the biggest companies in market capitalization, fell 0.8% to 1,277.91.

Shares of state-controlled oil company Ecopetrol SA (ECOPETROL.BO) fell 0.8% to COP2,580, while the preferred shares of the country's largest bank, Bancolombia (CIB), lost 1.5% to COP20,060.

The yield on the benchmark 2020 Colombian peso-denominated bond rose to 8.461% from 8.412% on Monday.

-By Inti Landauro, Dow Jones Newswires; 57-1-610 70 44 Ext. 1131; colombia@dowjones.com

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(END) Dow Jones Newswires

October 27, 2009 17:54 ET (21:54 GMT)


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