Colombia's peso fell, posting its biggest weekly decline since July, amid speculation Greece may default and deepen an economic slowdown.
The peso followed global equities lower as German Chancellor Angela Merkel's government prepared plans to shore up the nation's banks in the event Greece fails to meet the terms of its aid package and misses a payment on its debt.
European Central Bank President Jean-Claude Trichet said yesterday that "downside risks" for the region's economies have risen.
"The noise surrounding Greece and talk of a global recession has set a general tone of concern in markets and is leading to risk aversion," said Marisol Torres, an analyst at Bogota-based Helm Bank SA.
Colombia's peso dropped 0.6 percent to 1,798.80 per dollar at 3 p.m. New York time, from 1,788.50 yesterday.
The currency slid 0.9 percent this week, its biggest drop since the period ended July 29.
Colombia's peso bonds gained this week, sending benchmark yields to record lows, amid lower inflation expectations and as investors speculated the central bank will leave interest rates unchanged.
The yield on Colombia's 10 percent bonds due in July 2024 fell to 7.19 percent yesterday, its lowest on a closing basis since the securities were issued in March 2009.
The yield fell 10 basis points this week and is up two basis points today to 7.21 percent.
'Room for Gains'
Consumer prices fell 0.03 percent in August from the previous month, according to a Sept. 5 government report, compared to the median estimate for a 0.13 percent increse.
"Bonds have had a big rally and there is still room for gains," said Torres.
"The surprising inflation number and concern a global recession is imminent is leading to bets the central bank will remain on hold at least this month.
" She expects the yield on the security due July 2.024 to fall to 7.10 percent in September.
Banco de la Republica last month unexpectedly left its overnight lending rate unchanged at 4.5 percent on concern that global market turmoil may hurt growth in the South American country.
The central bank's next monetary policy meeting is scheduled for Sept. 30.
The peso followed global equities lower as German Chancellor Angela Merkel's government prepared plans to shore up the nation's banks in the event Greece fails to meet the terms of its aid package and misses a payment on its debt.
European Central Bank President Jean-Claude Trichet said yesterday that "downside risks" for the region's economies have risen.
"The noise surrounding Greece and talk of a global recession has set a general tone of concern in markets and is leading to risk aversion," said Marisol Torres, an analyst at Bogota-based Helm Bank SA.
Colombia's peso dropped 0.6 percent to 1,798.80 per dollar at 3 p.m. New York time, from 1,788.50 yesterday.
The currency slid 0.9 percent this week, its biggest drop since the period ended July 29.
Colombia's peso bonds gained this week, sending benchmark yields to record lows, amid lower inflation expectations and as investors speculated the central bank will leave interest rates unchanged.
The yield on Colombia's 10 percent bonds due in July 2024 fell to 7.19 percent yesterday, its lowest on a closing basis since the securities were issued in March 2009.
The yield fell 10 basis points this week and is up two basis points today to 7.21 percent.
'Room for Gains'
Consumer prices fell 0.03 percent in August from the previous month, according to a Sept. 5 government report, compared to the median estimate for a 0.13 percent increse.
"Bonds have had a big rally and there is still room for gains," said Torres.
"The surprising inflation number and concern a global recession is imminent is leading to bets the central bank will remain on hold at least this month.
" She expects the yield on the security due July 2.024 to fall to 7.10 percent in September.
Banco de la Republica last month unexpectedly left its overnight lending rate unchanged at 4.5 percent on concern that global market turmoil may hurt growth in the South American country.
The central bank's next monetary policy meeting is scheduled for Sept. 30.
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