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backLATINtalk January, 2012

Foreign Direct Investment Surges in Colombia

Colombia’s peso rose to an almost four-month high after foreign-direct investment in the South American country surged and global demand for higher-yielding assets rebounded.

The peso climbed 0.5 percent to 1,837.40 per U.S. dollar from 1,846 yesterday. It touched 1,832.31 on Jan. 13, its strongest intraday level since Sept. 19. The peso has jumped 5.5 percent so far this year, the best performance among world currencies tracked by Bloomberg.

Foreign-direct investment jumped 56 percent to $14.8 billion in 2011 from a year earlier, with 82 percent going into oil and mining, according to preliminary trade balance data from the central bank released on Jan. 13. Gains in global stocks also helped boost the peso, said Julian Marquez, an analyst at Interbolsa SA, Colombia’s biggest brokerage. U.S. and European stocks rose as slowing Chinese growth added to speculation that monetary policy at the world’s second-largest economy will ease.

“Investment flows continue to be strong,” said Julian Marquez, an analyst at Interbolsa SA, Colombia’s biggest brokerage. “The upside of the local economy is that it continues to expand while other countries in Latin America have a different story to tell.”

The economy expanded 7.7 percent in the third quarter from a year earlier, the fastest pace since the fourth quarter of 2006. It may grow as much as 6 percent in 2011, the fastest pace since 2007, according to the central bank. Brazil’s economy, the biggest in Latin America, shrank in the third quarter for the first time in more than two years.

The yield on the nation’s 10 percent bonds due in July 2024 rose two basis points, or 0.02 percentage point, to 7.39 percent, according to the stock exchange. The bond’s price fell 0.195 centavo to 120.739 centavos per peso.

Source: NearShoreAmericas.com - GAI

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