Aug. 13 (Bloomberg) -- Colombia’s peso posted its biggest weekly decline since May after President Juan Manuel Santos said the central bank is studying measures to ease the currency’s “worrisome” rally.

The currency slid 1.1 percent this week to 1,836.95 per U.S. dollar, from 1,816.10 on Aug. 8. That’s the biggest weekly drop since the period ended May 7. The peso fell 0.6 percent at 2 p.m. in New York.

Santos met with policy makers yesterday after urging them in an Aug. 11 speech to be “more creative, more bold” in stemming gains in the currency. While he declined to say what measures were discussed, he said the central bank is studying the issue.

“The market is expecting the central bank to announce something soon, possibly in the next monetary policy meeting” scheduled for Aug. 20, said Daniel Lozano, an analyst at Medellin-based brokerage Serfinco SA. “There’s also the chance policy makers will opt to announce something at a different time, using the surprise factor to cause a greater impact on the market.”

Santos’s comments before yesterday’s meeting that he “will try and convince” the central bank’s board to ease gains in the peso echo former President Alvaro Uribe’s calls for the central bank to find a “solution” to curb the rally, which he said caused exporters to cut jobs. Santos said yesterday an independent central bank is important and it’s also key for the bank and the government to maintain “a dialogue and permanent collaboration.”

‘Save’ Farmers

The Colombian Agriculture Society said in a statement this week that the peso’s rally causes “high unemployment and ruin in the Colombian countryside,” and asked the government to help “save” farmers. The Association of Colombian Flower Exporters has asked policy makers to intervene in the currency market to avoid the loss of “hundreds” of jobs.

Banco de la Republica may reinstate daily dollar purchases that expired in June, according to RBS Securities Inc. Latin America currency strategist Flavia Cattan-Naslausky. The central bank purchased $20 million a day between March 3 and June 30 to curb a rally policy makers said left the peso “misaligned.” Central bank chief Jose Dario Uribe said last month that policy makers haven’t ruled out “intervening in the market again.”

“The effect will be in slowing the pace of currency appreciation, but unlikely to undercut flows or reverse the currency trend once that the real economy flows persist,” Cattan-Naslausky wrote in a report today.

She forecasts the peso will trade between 1,700 and 1,800 in the “medium term.”

Colombia will attract about $10 billion in foreign direct investment this year, according to the government.

The yield on the benchmark 11 percent bonds due 2020 rose one basis point, or 0.01 percentage point, to 7.33 percent, according to Colombia’s stock exchange. The bond’s price declined 0.086 centavo to 125.271 centavos per peso.