Colombia Peso Weakens On Fed Official's Rate Comments

Colombia Peso Weakens On Fed Official's Rate Comments
Thu, Jun 12 2008, 19:25 GMT
http://www.djnewswires.com/eu
http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=73518a0c-...

Colombia Peso Weakens On Fed Official's Rate Comments

BOGOTA (Dow Jones)--The Colombian peso weakened against the dollar Thursday as local investors purchased U.S. dollars after the president of the Philadelphia Federal Reserve Bank said the Fed will have to raise interest rates.

The peso ended at COP1,703.84 Thursday, weaker than COP1,701.20 on Wednesday. The foreign exchange market traded a hefty volume of $1.15 billion.

The peso weakened as banks and other financial institutions bought dollars following comments from Charles Plosser, who said there is "no question" the Fed will have to raise U.S. interest rates to curb inflation before it gets "out of control."

"Local investors demanded dollars because there is a slight chance the Fed will increase rates late in June. If it doesn't in June, it will certainly increase rates more than once in the second half of the year," said Edgar Jimenez, analyst at the local unit of Stanford Group.

The U.S. benchmark rate currently stands at 2%.

A possible rate increase in the U.S. would reduce the spread between U.S. and Colombian interest rates, and would discourage foreign investors from pouring money into Colombia, Jimenez added.

Jimenez sees the peso ending around COP1,950, or even COP2,000, toward the year's end as he also sees the European Central Bank likely raising rates.

Meanwhile, the IGBC stock index ended almost unchanged, shedding 0.01% to 9,710.95.

The sharpest fall came from preferred shares of the local unit of Spain's BBVA Colombia (BBVACOL.BO), which retreated 6.4% to COP175.

The most heavily traded stock was state-owned oil company Ecopetrol (ECOPETROL.BO), which fell 0.4% to COP2,775.

Meanwhile, the yield on the benchmark 2020 peso-denominated bonds, known as TES, fell to 11.955% from 12.039% on Wednesday, when it hit an all-time record.

-By Diana Delgado, Dow Jones Newswires; 57-1-6955450; diana.delgado at dowjones.com

(END) Dow Jones Newswires

June 12, 2008 15:25 ET (19:25 GMT)

Copyright 2008 Dow Jones & Company, Inc.

By sloopskipper on Jun 12, 2008, 15:46 in Friendly Talkzone.

tejasmarcos says on Jun 12, 2008, 19:11:

here we go....

trying to walk a straight line on sour mash and cheap wine...

0 funny, 0 helpful.

BillBigD says on Jun 12, 2008, 19:21:

Interesting comments "Jimenez sees the peso ending around COP1,950, or even COP2,000, toward the year's end"

0 funny, 0 helpful.

goin_south says on Jun 12, 2008, 19:38:

sloop, you sure get in an uproar about an itsy bitsy teeny weeny movamiento.

Colombia es

0 funny, 0 helpful.

Buongone says on Jun 12, 2008, 19:52:

Come on Yankee dollar !! Oh Yea !! Things might be getting better for the Greenie.

0 funny, 0 helpful.

Tinto (Moderator) says on Jun 12, 2008, 21:46:

There must not be a futbol game or beauty queen to write about; they have to make up a story about a 2 peso move against the dollar.

0 funny, 0 helpful.

Buongone says on Jun 12, 2008, 22:46:

Like my little smiley say's, Smile, because manana could be alot worse !! Try paying a Tuition with the bottom dropping out on the dollar in Col. Get's more spendy. Oh it's OK when the Colombians rant & rave about the whopping that the dollar takes. But when we give a knumbs up about a possible turn around, it's silly. Eh? Well I guest I'm feeling a little silly.

0 funny, 0 helpful.

sloopskipper says on Jun 13, 2008, 07:54:

goin_south says on Jun 12, 2008, 19:38: flag

"sloop, you sure get in an uproar about an itsy bitsy teeny weeny movamiento."

Not really, it's just the 300 peso drop since I left Colombia a few months ago that I find a bit unsettling. That's certainly enough for me to re-examine my previous plan.

0 funny, 0 helpful.

Saltador says on Jun 13, 2008, 09:39:

Agreed. Every little peso rise is saluted and cheered on with 50 posts. But let the dollar rise and we're not supposed to do the same. Pretty funny actually...

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BillBigD says on Jun 13, 2008, 10:20:

$- Is at $1706 as we speak

0 funny, 0 helpful.