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.
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