Colombian Peso Weakens On US Jobs Data; Bond Yields Rise

Colombian Peso Weakens On US Jobs Data; Bond Yields Rise

BOGOTA (Dow Jones)--The Colombian peso weakened to COP2,006.25 against the dollar on Friday from COP1,991 at Thursday's close, as a fall in U.S. unemployment sparked a dollar rally. This is the peso's weakest level against the dollar since Oct. 28.

"There was a dramatic change in market expectations about the monetary policy of the U.S. Federal Reserve," said Oscar Montilla, a currency analyst at local bank Davivienda. "Until yesterday we thought that the Fed wouldn't raise interest rates until 2011, but today we got the marvelous news that unemployment had fallen in the U.S. This has led people to predict that the U.S. could start raising interest rates in April next year."

On the debt market, the yield on the benchmark government peso-denominated bond maturing in 2020 rose to 8.074%, from 7.94% on Thursday.

"It looks as though the economic recovery in the U.S. will be quicker than people expected, so people could think that the interest rates in the U.S. and locally could go up more rapidly," said Carmen Salcedo, market analyst with holding company Corficolombiana SA.

The Colombian benchmark IGBC index rose fractionally to a new all-time record high, up 0.02% to 11561.41 points.

Group de Inversiones Suramericana S.A. (GRUPOSURA.BO) was the most heavily traded stock, and fell 0.84% to COP23,700.

-By Matthew Bristow, Dow Jones Newswires; 57-1-610-70-44 Ext. 1132; colombia@dowjones.com

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Source: fxstreet.com/