Colombian Peso Strengthens For 2nd Day On US Fed Announcement

Colombian Peso Strengthens For 2nd Day On US Fed Announcement
Wed, Mar 12 2008, 23:35 GMT
http://www.djnewswires.com/eu

Colombian Peso Strengthens For 2nd Day On US Fed Announcement

BOGOTA (Dow Jones)--The Colombian peso strengthened on Wednesday for a second day as a result of the announcement made by the U.S. Federal Reserve to boost liquidity.

The peso strengthened to 1,847.1 Colombian pesos to the dollar from COP1,864 on Tuesday.

"People think the Fed's announcement will reduce the probability of a recession in the U.S., so they are more inclined to take position in more risky assets such as Colombia's," said Jorge Cortes, a market analyst with local investment bank Corficolombiana.

The Fed said Tuesday it will lend up to $200 billion of Treasury securities to primary dealers secured for a term of 28 days by a pledge of other securities.

It is intended to promote liquidity in the financing markets for Treasurys and other collateral and thus to foster the functioning of financial markets more generally.

"The effect will be short-lived," Cortes said.

On the equity market, the Colombian stock index IGBC rose 0.4% to 9,212.43 points.

The most traded shares were from state-owned oil company Ecopetrol SA (ECOPETROL.BO), which rose 0.8% to COP2,025, while COP51 billion worth of shares changed hands.

The yield on the benchmark peso-denominated bond maturing in 2020 rose to 11.52% from 11.48%.

-By Inti Landauro, Dow Jones Newswires; 57-310-867 65 42; colombia at dowjones.com

(END) Dow Jones Newswires

March 12, 2008 19:35 ET (23:35 GMT)

Copyright 2008 Dow Jones & Company, Inc.

By DodgerDogs on Mar 12, 2008, 18:35 in Friendly Talkzone.

DodgerDogs says on Mar 12, 2008, 18:35:

How low will the US dollar go ?

Our lives begin to end the day we become silent about things that matter.Martin Luther King:

tejasmarcos says on Mar 12, 2008, 19:02:

i'm not sure i understand that logic...

my glass is getting shorter on whiskey, ice and water...

Catfish35 says on Mar 12, 2008, 20:09:

me 2 TJ

" Say hello to my lil' friend"Tony Montana

tejasmarcos says on Mar 13, 2008, 04:28:

i think most of the offsetting currencies move in unison, fish. the yen had a big day yesterday against the dollar, subsequently so did the rest of the currencies. i am now befuddled what it is going to take to break the trend???

- wish i would have thrown some $$ into oil futures 2 months ago when it fell back down to the low 90's.

my glass is getting shorter on whiskey, ice and water...

rocinante says on Mar 13, 2008, 05:29:

Oil will be $150 - I'm not telling anyone to invest in anything but I'd be buying oil.

"The Fed said Tuesday it will lend up to $200 billion of Treasury securities to primary dealers secured for a term of 28 days by a pledge of other securities."

This has pumped some sunshine up the skirt of the Dow.

How low will the USD go? Right where it belongs. South of 1500. Wait until both Col and US create a higher yield differential.

What will break the trend? Catastrophe in Colombia and/or the US skyrocketing into a super duper power, trippling it's economic strength. The US has not much upside potential so don't hold your breath on that one.

You guys who don't earn in pesos will have to adjust to rates of below 1500. I don't think the dollar EVER sees the light of 2000. This is why the retirement community has made such a smart move to Panamá and Mexico and now Ecuador where the dollar is the currency and the only thing to worry about is inflation in those countries (El Salvador uses the USD and I have a friend who retired there). Note* The Mexican peso is (unofficially) pegged to the dollar and attracts richer retirees.

2 years ago a public bus ride in Colombia was 40 cents - today with inflation and FX rates, that same ride is 65 cents. That over a 60% and the year is not even half over.

Try to think about your monthly expenes being USD4,000 and now two years later they are USD6,500. You WERE budgeted and could afford 6,500 but didn't really want to pay that much. Right now the cushion many once had is diminishing.

"World economic indicators point to a democrat winning 2008. It will surely be Obama. Peso 1400 by November" Feb 5, 2008

tejasmarcos says on Mar 13, 2008, 06:03:

i feel sorry for the exporters. 1500 is a killer for them...

my glass is getting shorter on whiskey, ice and water...

sandman0011 says on Mar 13, 2008, 06:37:

You are right Tejas. The Flower industry has already laid off 20,000 people because they can no longer export their products economically because of the dollar devaluation. 70% of the fresh cut flowers imported to the US come from Colombia.

Just wait until you see the cost of coffee in supermarkets start rising or free refills at restaurants start disappering.

I am already feeling the devaluation here. It was 2300:1 when I first came here. Now, it is in the high 1800's. That is an "ouch" if there ever was one. Still, I am calling this home now and hope to for some time to come.

Mdellin Travel Guide

www.medellintravelguide.com

www.medellintravelguide.com and www.medellinvisitorsguide.com

Saltador says on Mar 13, 2008, 07:29:

rocinante,
I'm praying fervently your predictions do not come to fruition.
Just out of curiosity, where does your expertise in global economics come from?
Sincerely hoping you're wrong, (but acknowledging you could be right)
S

tejasmarcos says on Mar 13, 2008, 07:37:

there is a myriad of reasons for the drop, but one of the biggest factors is the movement in currency investment. i think the spread now is 6.25%. that drives alot of investment $$ dollars into COP. it is the same thing (speculation by investors) that is driving the frickin price of oil and gold.

my glass is getting shorter on whiskey, ice and water...

BillBigD says on Mar 13, 2008, 18:39:

Another way to play the price of oil is ticker USO.