Colombian stocks rose to a nine-month high Thursday while the peso fell to a six-week low on bets Colombia's monetary authorities may be preparing new measures to weaken the currency.
The Colcap index, the benchmark for the Colombian Stock Exchange, climbed 0.81% to end at 1,751.47 points, its highest closing level since June 10. The index is 12% higher this year, erasing most of last year's 14% decline.
Shares of national oil company Ecopetrol (ECOPETROL.BO, EC) rose 1.9% to an all-time high of COP5,480. Wednesday, Colombia's government said Ecopetrol soon will start exploring and drilling for oil in Venezuela, a move that could boost the company's reserves and output.
Meanwhile, the Colombian peso closed at COP1,792.00 per dollar, 1% weaker from the day-earlier close of COP1,773.80, according to Set-FX. Thursday's closing level was the currency's weakest since Feb. 15.
The peso started the session weaker on concerns over the global economy after the release of a report showing lower-than-forecast U.S. economic growth. Colombia's currency continued to weaken throughout the day on market concerns the local government or central bank may enact new measures to stem the peso's medium-term strength. It is up 9% against the dollar since Jan. 1.
"Pressures from [Colombian] industry and exporters will rise if the exchange rate drops below COP1,750 and approaches 1,700 to the dollar," the Eurasia Group said in a research note. "While the central bank will likely first undertake a more aggressive reserve accumulation strategy, the [President Juan Manuel] Santos administration could very well push for additional measures, such as capital controls, in order to contain growing political pressures from exporters."
-By Dan Molinski, Dow Jones Newswires; 57-310-867-6542; [email protected]
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