Colombian Peso Holds Near Eight-Month High on Rate Outlook

Colombia’s peso held near an eight- month high on speculation that the central bank will raise interest rates this week.

The peso was little changed at 1,757.50 per U.S. dollar at 9:34 a.m. in Bogotá, and earlier touched 1,756.5, near the strongest since July 22. 

It has jumped 10 percent this year, the second-biggest advance after the Hungarian forint.

“The market is starting to anticipate a possible increase in interest rates,” said Alejandro Reyes, head analyst at Ultrabursatiles SA brokerage. “

Colombia’s fundamentals have remained solid and fourth-quarter GDP will show growth is strong compared to other countries in the region, which favors investors’ appetite for Colombian assets.”

Colombia’s central bank will raise its overnight lending on March 23. 

The central bank will increase the rate a quarter percentage point to 5.5 percent, according to 13 of 28 economists in the survey. 

Fifteen analysts estimate the rate will remain unchanged. Policy makers increased the overnight lending rate 25 basis points, or 0.25 percentage point, to 5.25 percent on Feb. 24, the ninth increase since January 2.011.

The national statistics agency will report 2.011 annual growth of 5.8 percent tomorrow, according to the median.

The yield on Colombia’s 10 percent peso-denominated debt due July 2.024 fell two basis points, or 0.02 percentage point, to 7.34 percent, according to the central bank.