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Colombia's Government Seeks A Stable,
Competitive Peso
BOGOTA (Dow Jones)--The Colombian government seeks a
stable and competitive foreign exchange rate,
according to President Alvaro Uribe, following the
Colombian peso's appreciation of 26% in the past
three months.
"For the government, it is too difficult to deal
with these excesses," Uribe said late Wednesday in a
speech in the Caribbean City of Santa Marta. "One
day there is a fear of a big devaluation, then a few
days later there is a big fear of possible ravages
the appreciation can bring in."
The peso was trading at 2,069 Colombian pesos to the
dollar on Thursday morning from COP2,609.98 in early
March. A strong peso affects exporters who see their
products losing competitiveness on the international
markets.
In the first half of 2008, the peso appreciated 22%,
then lost 37% in the six months to early March and
appreciated 26% in the following three months.
Uribe noted that the government spent more than
COP600 billion ($291 million) last year in subsidies
to exporters of manufactured goods affected by the
strong appreciation of the Colombian peso.
Last year's appreciation of the Colombian peso
obliged exporters to cut thousands of jobs.
"Our government will be very careful to protect
employment," Uribe said. He didn't say what the
government may decide, though.
On Wednesday, Finance Minister Oscar Ivan Zuluaga
said the government will evaluate whether to take
action to respond to the appreciation.
Zuluaga attributed the peso strengthening to
investors' risk appetite for emerging- market assets
as the crisis seems to end faster than expected.
Foreign oil companies are investing heavily in
Colombia, he said, now that that oil prices are
picking up, making the peso stronger.
According to the central bank, oil and mining
companies invested $2.43 billion in those sectors
since the beginning of the year through May 15 |
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