Colombia’s central bank could step up dollar purchases to curb the world’s biggest currency rally and give the Andean nation a “much higher” level of foreign reserves, President Juan Manuel Santos said.
“The size of our foreign trade has increased, and according to many studies we can have a much higher level of reserves, about $13 billion higher,” Santos said in an interview today aboard his presidential airplane. “I would recommend to the central bank that they increase the amount they purchase on a daily basis, and I imagine they are studying that to see if they should follow that path.”
The peso has appreciated 9.2 percent since the start of January, the biggest gain of 170 currencies tracked by Bloomberg, even after the central bank announced a $20 million daily purchase program to try to halt its rise. Santos said decisions about dollar purchases will be taken by the central bank, and that he “respects very much” the institution’s independence.
Colombia had $34.3 billion in international reserves in June, according to the central bank.
Increased public works spending will help sustain growth in the second half of the year and offset a slowdown caused by weaker global demand, Santos said.
The government has no urgent need to sell a stake in state- controlled oil company Ecopetrol SA (ECOPETL), Santos said.
“We’re not in a hurry with that,” Santos said. “It depends on the world markets, it depends on the financing, but today we don’t really need it.”
Increased attacks on oil companies by guerrillas from the Revolutionary Armed Forces of Colombia, or FARC, are a sign of “weakness and desperation,” according to Santos.
“Their sources of financing through drug trafficking have been diminished and so they’re desperate and trying to go back to extortion to see if they can raise some money,” Santos said.
The guerrilla assaults are having a “marginal” impact on the sector, Santos said. An attack today on a railway that carries coal for units of Anglo American Plc (AAL), Xstrata Plc (XTA) and BHP Billiton Ltd (BHP), Caracol Radio had no effect on exports, he said.
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