Colombian bond upgrade and peso exchange

Well so much for the hope that last week´s market scare would induce a flight to quality and we would see the peso/dollar back at higher levels (good for those of us still living off of our dollar investments), with S&P upgrading Colombian bonds this week look for the Peso to strengthen even more. Also, how long will the Central Bank be able to keep up its frenzied purchase of dollars to keep the peso week(bought something like 3 billion last year)? Stack that up against the relative performance of the two countries (Col. forecast of 6.6 versus U.S. of somewhere in lower 2%) and I agree with a post I read earlier forecasting 1800COP/dollar.

Now the discussion topic: What´s the central bank to do? They´ve raised interest rates to 8% (highest in 4 years) to stifle growth a little. This will keep the economy from overheating and provide a floor for the Peso (which if you´ve talked to any exporters, is something they severely need) but will obviously not help the government address the HUGE problem of unemployment and poverty.

joe.

By jh816 on Mar 6, 2007, 16:31 in Friendly Talkzone.

jh816 says on Mar 6, 2007, 16:34:

Though the bond upgrade is great Disclaimer: Regardless of where the bond upgrade may take the peso and its effect on the exporters/economy/etc. it´s a huge win for Colombia. Just one rating off from investment grade, a vote of confidence from the investment community, and a large influx of FDI.

joe.

0 funny, 0 helpful.