Wednesday, May 31, 2023

Colombia Finance Chief Says Peso to Weaken Amid More Action

Colombian Finance Minister Mauricio Cardenas said he expects the peso will soon weaken to 1,800 per U.S. dollar as he sees no reason for the currency to have appreciated so much over the past month.

“I think the dollar is going to go back to 1,800 pesos very soon,” Cardenas said in an interview at his office in Bogota last night. “I honestly don’t think that this economy is any different today than it was three months ago.”

The peso declined for a second day, dropping 0.4 percent to 1,777.43 per dollar at 9:33 a.m. today in Bogota. The currency fell 0.6 percent yesterday, the biggest decline since Aug. 15, after Cardenas said the Treasury will boost dollar purchases this month and buy about $1 billion this year for its oil stability fund. The currency touched 1,750.50 on Jan. 2, the strongest intraday level since July 2011.

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Cardenas said he would like to see the central bank step up dollar purchases after it bought a record $4.8 billion last year. The seven-member policy board which he presides will discuss potential measures to weaken the currency at its meeting Jan. 28, he said.

Banco de la Republica said on Sept. 28 it was extending a program of daily dollar purchases and will buy a minimum of $3 billion between Oct. 1 and March 29 in amounts of at least $20 million per day.

“Would I like to step up those interventions? Yes, of course,” Cardenas said, adding that he doesn’t want to anticipate what action, if any, the bank will take. “I don’t have a number in mind. I think we have to understand better the causes of this appreciation, and discuss potential measures.”

For the government’s part, if liquidity conditions permit the Treasury will also be able to step up dollar purchases of its own. State-run oil company Ecopetrol SA (ECOPETL) can also seek out more domestic instead of foreign sources of financing, he said.

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