Colombia’s central bank would like the country’s peso currency to weaken against the U.S. dollar, board member Juan Jose Echavarria said on Wednesday.
Colombia has seen record foreign investment flow into the nation in recent years as security improvements lower the risk of exploring for oil, gold and other natural resources.
The flood of money, coupled with attractive yields compared with near-zero interest rates in developed nations, has helped the peso strengthen 8.1 percent so far this year.
“This is the truth that central bank (board members) are not letting out, but I’ll say it, the board in full wants a higher exchange rate. I wish it would be at 1,950 or 2,000, we’d all be calmer, there wouldn’t be a problem,” Echavarria said in a meeting to discuss the country’s economic outlook.
Following Echavarria’s comments Colombia’s Peso currency weakened 0.20% from its closing price on Tuesday to 1,794.6 per U.S. dollar.
Exporters like flower growers have suffered from the strengthening peso because they pay costs in pesos and receive dollars for their sales. As many as 20,000 flower jobs have been lost in the last four years, most blamed on the strong currency.
In a bid to stem the peso’s rise, the government said it would not bring in dollars for financing in 2012 and would keep $1 billion in dividends from state oil company Ecopetrol, and another $1.2 billion in royalties, abroad.
The government has said it would avoid imposing capital controls to prevent pressure on the currency and instead aim for long-term measures and micro-structural reforms. In 2007, it established unpopular capital controls – lifted later – to deter the entry of speculative money.