Colombia: Colombian peso strengthens despite global volatility
November 2, 2011
On 31 October, the Colombian peso (COP) traded at 1,863 per USD, which represented a 2.8 % nominal appreciation compared to the previous month's position and marked the biggest monthly jump since April. However, on a year-on-year basis, the peso depreciated 1.7% versus the USD. The COP followed a similar pattern seen in other emerging market currencies in October as a response to improving expectations about the resolution to the Eurozone's debt crisis and strengthening local capital flows. On 28 October, the Central Bank announced that it will replace the exchange intervention mechanism in the spot market agreed in the September meeting. The new exchange intervention mechanism aims to control currency volatility by purchasing and selling up to USD 200 million in the derivatives markets if the COP fluctuates 4% above or below the 20-day moving average, which should trigger fewer interventions than previously, when the Bank had set a 2% margin above or below the 10-day moving average.