The International Monetary Fund said the Colombian peso is “broadly in line” with the economy’s fundamentals, even as the government and the central bank step up efforts to weaken the currency, according to a report published today.
Finance Minister Mauricio Cardenas told reporters in Bogota today that the peso rate “doesn’t correspond to reality.” The currency strengthened 0.6 percent to 1,785.93 per dollar at 11.19 a.m. in Bogota. Cardenas said Jan. 29 that the peso is stronger than its equilibrium rate of 1,950 per dollar.
Central bank Governor Jose Dario Uribe said Jan. 28 that the Colombian central bank will boost daily dollar purchases 50 percent to at least $30 million and will buy more than $3 billion between February and May. The currency has gained 8.5 percent since the start of 2012, the fifth-best performer of 25 major emerging market currencies tracked by Bloomberg.
The Andean nation has room for further monetary easing “if downside risks materialize,” the IMF said in the report. The economy is vulnerable to a “steep drop in oil prices” or a sharp growth slowdown in its trading partners, the IMF said in the report.