FOREX FLASH
COLOMBIA TO STEP UP DOLLAR PURCHASES
The Colombian peso may have gained 26 per cent over the past year, but the rally could be stopped in its tracks if the central bank goes ahead and steps up US dollar purchases to help the Latin American country’s exporters.
Bank of America analyst Alberto Boquin said yesterday that central bank chief Jose Dario Uribe will act to more than double the daily purchases. Both Bank of America and RBS Greenwich Capital Markets say the peso will drop 9 percent against the dollar by the end of this year.
LOONIE HITS PARITY WITH GREENBACK
The Canadian dollar traded at parity with the greenback for the first time since July 2008, hitting Ca$0.9992 against the US dollar yesterday. The loonie has been boosted by the rising price of crude oil and the prospect of higher interest rates. Economists expect the Bank of Canada to raise rates to 2.25 per cent by mid-2011 compared to the current rate of 0.25 basis points.
EX CHINA OFFICIAL SLAMS DOLLAR
A former official to the People’s Bank of China, Yu Yongding, expects the US dollar to weaken considerably in the long-term. Yongding, who was writing an opinion piece for the Australian Financial Review, also said that China’s vast foreign exchange reserves, mostly denominated in US dollars, faced a “triple whammy” of a weaker greenback, weaker Treasuries and high US inflation.