Colombian Finance Minister Juan Carlos Echeverry said on Monday he saw the peso weakening to the 1,800 level versus the dollar due to global risks.
Like other emerging markets, Colombia has faced appreciation pressures against its currency due to low interest rates in developed nations coupled with high economic growth rates and attractive rates in developing nations.
“This global turbulence should take us to the 1,800 levels,” Echeverry said on a local radio and television program.
Echeverry also said that Colombia’s economy could expand around 6 percent this year versus 4.3 percent in 2010. The government has an official target of 5 percent for 2011.
In an interview with newspaper El Espectador, the minister said the government had spent $195 million to prevent the peso from appreciating too much against the dollar.
Colombia’s peso currency closed at 1,789.30 versus the greenback on Friday, and has firmed around 6.3 percent so far this year.
The minister said that Standard & Poor’s downgrading of U.S. debt had shaken the global economic “anchor”, while the international panorama would inevitably affect emerging markets to some extent.
“We’re always going to suffer,” he said. “We are in a world of convulsion. Of course, that affects us,” he said.
The specific impact on Colombia and the rest of Latin America would, however, depend on the effect on commodities prices, Echeverry said.