Colombia Peso Rises Most in Two Months on Investment Grade Bet.

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Fuente: Bloomberg.

Colombia's peso rose the most in two months amid speculation the country will get a second investment-grade rating and after leaders of the Group of Eight said the global economy is strengthening, helping boost demand for higher-yielding emerging-market assets.

The peso jumped 1 percent to 1,807.64 per U.S. dollar at 3:08 p.m. New York time, from 1,826.10 yesterday. That's its biggest increase since April 1. It gained 0.4 percent this week and has dropped 2.2 percent in May, the worst performance among six Latin American currencies tracked by Bloomberg.

"There's speculation we will see a second investment-grade rating soon, and that led the peso to jump," said David Aldana, head analyst at Bogota-based brokerage Ultrabursatiles SA. "Comments by the G8 are helping risk appetite today."

Following the upgrade of Colombia's foreign debt to investment grade by Standard & Poor's in March, a second rating increase is needed by either Fitch Ratings or Moody's Investors Service for Colombian assets to be included in most investment- grade portfolios.

Fitch analyst Erich Arispe said in a May 13 interview that the rating agency is waiting for lawmakers to vote in June on fiscal measures before deciding whether to upgrade the country to investment grade.

'Very Satisfied'

Central bank chief Jose Dario Uribe said in an interview today that he's "very satisfied" with the effect of the bank's dollar-buying program and that capital controls aren't currently needed to ease gains in the peso.

Uribe, who spoke at an event in Rio de Janeiro sponsored by the International Monetary Fund, said the bank plans to buy "at least" $20 million daily through June 17. He declined to say whether policy makers will extend the program at its board meeting next week.

The central bank in February extended a plan to buy a minimum of $20 million daily in the local market until "at least" June 17.

Speculation Colombia's central bank will announce next week an extension to its plan to buy dollars daily in the currency market helped ease gains in the peso this week, according to Aldana. Banco de la Republica is slated to hold its monthly monetary policy meeting May 30.

Uribe's comments may have spurred bets the central bank won't announce an extension in next week's meeting, according to Aldana.

"As long as the peso remains weaker than 1,800 we won't see levels that would likely trigger more dollar purchases," said Aldana. Central bankers will "probably wait for when these are really needed" to extend the plan, he said.

Banco de la Republica next week will raise its overnight lending rate by a quarter percentage point to 4 percent, according to all 20 economists surveyed by Bloomberg.

The yield on Colombia's 10 percent bonds due July 2024 was little changed at 8.20 percent, according to Colombia's stock exchange.