Colombia’s new finance minister said the nation’s treasury should supplement actions by the central bank to buy dollars and limit the world’s second biggest currency rally this year.
“The national Treasury should intervene in the currency market,” said Mauricio Cardenas, who assumed his post four days ago after predecessor Juan Carlos Echeverry resigned. He said Colombia needs U.S. dollar purchases “to slow the revaluation of the peso.”
The government won’t announce the size of the treasury’s dollar purchases, he told reporters yesterday at a conference for entrepreneurs in Medellin.
The peso has appreciated 7.7 percent this year against the dollar, the second-biggest gain among world currencies tracked by Bloomberg, amid record foreign direct investment and as international investors seeking higher yields buy Colombian securities.
Colombia seeks to help exporters by limiting gains in the currency through dollar purchases. The nation’s central bank on Sept. 5 bought $35 million in the spot market, up from the minimum of $20 million a day the bank has said it will buy until at least Nov. 2. On Aug. 24 Banco de la Republica said it will boost dollar purchases to $700 million by the end of September, or an average of $28 million a day.
“We should use the excess cash we have at this moment to buy dollars and to save in external markets,” Cardenas said. “We could even pay our external debt and reduce our external financing needs.”
The government is maintaining its forecast that Colombia’s gross domestic product will grow around 4.8 percent in 2012, Cardenas said. Preliminary data shows the nation’s economy expanded 4.7 percent in the second quarter, he said. He predicted growth of 4.85 percent at an annual rate in the second half of 2012.
Economic growth would be around 2 percentage points higher without the nation’s civil war with Marxist guerrillas, Cardenas said.
President Juan Manuel Santos announced this week that he agreed to hold peace talks with the Revolutionary Armed Forces of Colombia, or FARC, beginning with a meeting next month in Oslo, Norway. The talks come after a decade of military strikes withered the insurgents’ ranks, including the high-profile killings of top FARC commanders Raul Reyes in 2008 and Alfonso Cano in 2011.