Colombia’s government has bought $500 million on the foreign exchange market within two weeks in an attempt to weaken the country’s strong peso, newswire Reuters reported Wednesday.
Colombia’s Finance Minister Juan Carlos Echeverry said that purchases on the foreign exchange market this week and last week would total $500 million, spent in an effort to stem gains against the U.S. dollar.
Investment in oil and mining industries has reached record levels over the past number of years which has increased the value of the peso, one of the biggest gaining currencies worldwide in 2012.
The government has asked the central bank to increase its dollar purchases from $20 million a day to $40 million to try and soften the peso which has firmed around 6.5% against the dollar so far this year,
“We’re going to be looking at how the market behaves so that we give it support in addition to the actions that the central bank is taking,” said Colombia’s finance minister.
As well as weakening the peso, the dollar purchases are used to prepay Colombia’s dollar debt.
At the close of trading on Tuesday Colombia stocks fell as investors sold shares of state oil company Ecopetrol even though oil prices in general had increased, according to the Wall Street Journal.
The higher oil prices caused the peso to strengthen after a week of declines which were largely the result of the government’s continued buying in the foreign exchange market.