Colombian Peso Drops to 3-Month Low on Bank's Dollar Purchases

By Andrea Jaramillo

June 26 (Bloomberg) -- Colombia's peso plunged to an almost three-month low on speculation that the central bank's plan to buy $20 million per day will stem currency appreciation.

The peso dropped 2.7 percent to 1,820.2 per dollar at 10:03 a.m. in New York, from 1,777.5 yesterday, according to the Colombian foreign-exchange electronic transactions system, known as SET-FX. Earlier it touched 1,827.7, its lowest since April 3.

Banco de la Republica said on June 20 that it will buy the U.S. dollar through competitive auctions to accumulate foreign reserves and stem appreciation that has reached 11 percent this year. The peso has dropped 8.7 percent since the central bank announced its plans.

The yield on Colombia's benchmark 11 percent bonds due July 2020 rose 13 basis points, or 0.13 percentage point, to 12.22 percent, according to Colombia's stock exchange. The bonds' price fell 0.757 centavo to 92.45 centavos per peso.

To contact the reporter on this story: Andrea Jaramillo in Bogota at ajaramillo1@bloomberg.net