Colombia peso down slightly after minister announces dollar purchases

(Photo: Julian Castro)

Colombia’s peso dropped slightly against the dollar on Tuesday following an announcement by the government it would buy dollars alongside the central bank to weaken the currency and support ailing exports.

The peso drop in the the peso was recorded just after Finance Minister Mauricio Cardenas wrote on Twitter: “Priority: a competitive dollar for the benefit of the country. Treasury to restart buying of dollars to the necessary extent.”

The announcement came in addition to the purchase of reserves being conducted by the Central Bank to remove the dollars that flooded the market and led to the fall in the price of the currency, radio station RCN reported.

The Colombian currency rose to the highest in six months on May 8 following months of devaluation that was welcomed by Colombia’s export sectors who have seen sales abroad drop over the past year.

The head of research at Bogota-based brokerage Ultrabursatiles, Alejandro Reyes, told US television network Bloomberg that the government is trying to prevent the peso from strengthening past 1,900 per dollar.

“To break the 1,900 barrier has a big psychological impact in the market, and starts speculation that it could get even stronger. The treasury reacted and is buying an important number of dollars, and is changing the mindset of investors, at least in the very short term,” Reyes told Bloomberg.

President Juan Manuel Santos said in an interview on RCN Radio on Monday that the “ideal”exchange rate would be between 2,000 and 2,200 pesos per dollar.


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