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Colombia peso extends losses, stocks end higher

BOGOTA: Colombia's peso extended its recent losses on Wednesday, while stocks ended higher in trading that saw shares of the powerful Bavaria Group post impressive gains.

The peso slipped 0.26 percent, or five pesos on the day, to end at 1,914 to the dollar, its weakest close since Dec 1.

As in Tuesday's session, when it fell 1.41 percent, interbank dealers said the peso slipped on the back of brisk demand for dollars from banks and the corporate sector and excess liquidity in local currency.

The forex market handled 149 transactions for a near-average total of $97.7 million. Dealers said the peso traded between 1,905 and 1,921, a relatively broad range highlighting uncertainty about the peso's near-term direction.

Wednesday's drop against the dollar marked the fourth consecutive session in which the peso, which depreciated 8.75 percent in inflation-adjusted terms in 1999, ended lower.

On the stock market, brokers said recent cuts in key interest rates were spurring growing buying interest, since they took some of the premium off investment in the fixed income market.

"People are buying stocks because interest rates...are very low," said one broker on the exchange in the northwest city of Medellin. "Furthermore, stocks are cheap and many people prefer to invest with a bit of risk if it yields a better return (than fixed income)," he said.

The day's biggest winner by far was Valores Bavaria , the holding company that groups the non-brewing interests of the Bavaria beverage group.

Bavaria itself, the country's most actively traded share, closed up 2.38 percent in Medellin at 8,600 pesos per share.

But Valores jumped 9.69 percent in Bogota to settle at 1,755 pesos.

Traders said the move to higher ground came on follow-through buying after recent capitalisation deals shored up the finances of several key members of the Bavaria stable.

Other gainers included leading Colombian cement maker Cemento Argos which ended up 5.16 percent in Bogota at 5,050 pesos per share.

Overall, Bogota's stock index rose 1.18 percent to 1,021.39 on lackluster turnover of $352,000. In Medellin, where an anaemic $507,000 of shares traded hands, the IBOME general price index added 1.85 percent, ending at 11,931.93.-Reuters