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The Finance Ministry announced that it will keep $1.5 billion usd abroad through the first months of 2011 to reduce currency demand. It also plans to reduce some tariffs for raw materials and capital goods in a bid to help companies small and medium-sized businesses to obtain equipment and other goods more cheaply.
The central bank will also will extend the period for purchasing dollars in the spot currency market to check a peso rally that has seen it gain 11.5 percent vs usd so far in 2010, the second-best performance after the Yen.
Economist Munir Jalil says “the bank is in a tough spot. Either it makes announcements and confirms what most of the market is expecting or it waits until the measures are really needed.”
Brasil recently took several aggressive steps to ease REAL appreciation because its currency gained 36 percent since 2008. Colombia may follow suit and restrict capital inflows to ease pressure on the peso.
SEE ALSO, GLOBAL POST STORY on the human toll of strong peso;
“For most Colombians, the revalued peso is a bad thing,” said former econ. minister Mauricio Cardenas. “Your average Colombian works in manufacturing or agriculture and these sectors have been hit very hard. The strong peso keeps unemployment high.”
http://www.globalpost.com/dispatch/colombia/101028/foreign-investment-emerging-markets-peso
