The Colombian peso weakened the most in emerging markets and local bonds dropped as the first cabinet shakeup of President Gustavo Petro’s eight-month-old government spooked investors.
(Bloomberg) — The Colombian peso weakened the most in emerging markets and local bonds dropped as the first cabinet shakeup of President Gustavo Petro’s eight-month-old government spooked investors.
The peso depreciated 1.6% as of 11 a.m. in Bogota, the most among 23 major emerging-market currencies tracked by Bloomberg. The yield on peso-denominated government bonds maturing in 2033 rose to 13.36%.
Education Minister Alejandro Gaviria left the government on Monday evening, as Petro’s radical plans to reform the pension and health systems alienate key allies. Gaviria had been openly critical of Petro’s health care bill, which seeks to slash the role of private insurance companies.
Sports Minister Maria Isabel Urrutia and Culture Minister Patricia Ariza also left.
While investors don’t worry too much about these three ministries, the moves generated uncertainty and the fear that more changes may be in the cards, said Munir Jalil, Andean economist at BTG Pactual.
The government likely managed to prevent a larger selloff by issuing a reassurance that Finance Minister Jose Antonio Ocampo has no plans to leave, Jalil said.
–With assistance from Maria Elena Vizcaino.
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