Colombian Peso Drops to a Six-Week Low; Argentine Bonds Gain

By Drew Benson and Andrea Jaramillo

Oct. 27 (Bloomberg) -- Colombia’s peso fell to the lowest level in six weeks on speculation the central bank will buy dollars, pushing further declines in the currency.

The peso dropped for a fourth day, weakening 1.8 percent to 1,984.72 per U.S. dollar at 2:40 p.m. New York time, from 1,948.7 yesterday. It touched 1,990, the weakest since Sept. 15. The peso has tumbled 3.3 percent in the last five days, the second-biggest drop after the South African rand among 26 emerging market currencies tracked by Bloomberg.

“The peso is sliding on expectations the central bank will buy dollars, but we don’t see the central bank buying yet,” said Julian Cardenas, head of economic research at Bogota-based brokerage Corredores Asociados SA.

The central bank said Oct. 23 it will spend as much as 3 trillion pesos ($1.52 billion) to buy U.S. dollars and government peso bonds to inject cash into the financial system. Policy makers didn’t disclose how much would be spent on buying each.

The yield on Colombia’s 11 percent bonds due in July 2020 rose six basis points, or 0.06 percentage point, to 8.47 percent, according to Colombia’s stock exchange.

In Argentina, the yield on the nation’s inflation-linked peso bonds due in 2033 fell 20 basis points to 11.62 percent, according to Citigroup Inc.’s local unit.

Argentine Debt Law

Economy Minister Amado Boudou will discuss the government’s plan to suspend a law preventing the restructuring of about $20 billion in debt with Congress tomorrow, spokesman Sergio Poggi said. President Cristina Fernandez de Kirchner sent a bill to Congress last night calling for the suspension of the law through the end of 2010. Lawsuits stemming from the 2001 default are blocking Argentina from international debt markets.

Argentina’s peso rose 0.1 percent to 3.8213 per dollar from 3.8235 yesterday.

Venezuela’s bolivar gained 1.5 percent to 5.22 per dollar in unregulated parallel market trading from 5.3 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.

Petroleos de Venezuela SA, the country’s state oil company, said yesterday it boosted a bond sale to $3.26 billion from $3 billion to meet local investor demand for dollar-based assets. PDVSA, as the company is known, said it met 100 percent of the orders for the securities than can be purchased locally with bolivars and sold abroad for dollars.

In Chile, the peso climbed 0.6 percent to 531.25 per dollar, from 534.45 yesterday. The yield for a basket of Chile’s 10-year peso bonds in inflation-linked currency units, called unidades de fomento, rose three basis points to 2.94 percent, according to Bloomberg composite prices.

Peru’s sol declined 0.1 percent to 2.8905 per dollar, from 2.8890 yesterday. The yield on the country’s 8.6 percent sol- denominated bond due August 2017 was little changed at 4.83 percent, according to Bloomberg prices.

To contact the reporters on this story: Drew Benson in Buenos Aires at abenson9@bloomberg.net; Andrea Jaramillo in Bogota at ajaramillo1@bloomberg.net