Colombia’s peso has dropped to a record low compared to the US dollar, which peaked at 3,480 pesos on Monday.
The record was initially set in February when the dollar reached 3,379 pesos, but dropped again after the Central Bank said it would stop purchasing dollars.
Two weeks ago the peso started dropping against both the dollar and the euro, which increased in value to 3,890 pesos.
After Finance Minister Alberto Carrasquilla presented his 2020 budget and the central bank announced it had lowered the country’s growth rate by 0.5 percentage points, the drop accelerated.
In the case of the dollar, the drop in value of the peso was stimulated by the announcement of the American central bank, the FED, to lower interest rates for the first time in a decade.
While Carrasquilla and President Ivan Duque have expressed optimism, both Colombian and international economists have expressed concern about the government’s inability to stimulate economic growth, either through increased exports or domestic consumption.
The Duque administration presented a controversial tax plan last year that may have affected Colombians’ purchasing power. Colombia’s unemployment rate, which has been on the rise for years, also grew faster after Duque took office and appointed Carrasquilla.
The finance minister is controversial because he appeared in the Panama Papers and because he legalized a dodgy investment scheme for municipalities when he was minister of former President Alvaro Uribe.
The minister then created a company to enrich himself with this scheme while 10% of Colombia’s municipalities nearly went bankrupt.
Last week, Carrasquilla “baffled” economists with his 2020 budget, according to Bloomberg, as he had apparently improvised to remove projected privatization revenue from the budget economists. A fiscal watchdog accused the minister of resorting to “shenanigans” like that to make his budget fit the week before.