Colombia Bought $800 Million to Curb Peso Rally, Echeverry Says

The Colombian government has bought $800 million as it pursues a program of currency intervention parallel to the central bank’s to weaken the peso and help the country’s exporters.

The Treasury has bought $600 million in recent weeks, in addition to $200 million bought by Colombia’s bank deposit- guarantee fund, known as Fogafin, outgoing Finance Minister Juan Carlos Echeverry said in an interview in Barranquilla. The purchases will continue under Mauricio Cardenas, who takes over in the next few days, Echeverry said.

“In the handover, we agreed that the government should be present in this market in an intelligent way, giving support to an exchange rate that is a bit more competitive,” Echeverry said in an interview in Barranquilla, on Colombia’s Caribbean coast. “The specific amounts and times are up to him.”

The Finance Ministry began to buy dollars this month, and continued to do so even after the central bank stepped up its own intervention. Banco de la Republica on Aug. 24 said it will buy $700 million by the end of September, or an average of $28 million a day, from $20 million a day previously. Colombia had foreign currency reserves of $34.7 billion as of July.

The peso has gained 5.9 percent in 2012, the biggest gain after the Chilean peso and the Hungarian forint of 170 currencies tracked by Bloomberg, as foreign capital continues to pour into oil and mining projects, even as Europe’s debt crisis weighs on investor sentiment.

Echeverry, a former academic who once worked as a teaching assistant to Federal Reserve Chairman Ben S. Bernanke, quit President Juan Manuel Santos’ cabinet last week, citing personal reasons.

He said he planned to spend a “two or three years” outside Colombia, work at his consultancy firm, and spend more time with his three children, ages 2, 4 and 6.

The central bank cut its benchmark interest rate a quarter point for a second straight month at its August policy meeting this week, citing the global economic slowdown.

To contact the reporter on this story: Oscar Medina in Bogota at omedinacruz@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at Jgoodman19@bloomberg.net

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