Colombia finance minister urges more aggressive forex intervention

Colombian Finance Minister Juan Carlos Echeverry said he wanted more aggressive foreign exchange market intervention to stem the peso’s strong gains.

Colombia has attracted record-high foreign investment since defeating back leftist rebels during the past 10 years, which has boosted the economy but also applied appreciation pressure on the country’s currency, making exports less competitive.

The central bank, in a bid to counter the growing currency, is purchasing at least $20m each day until early November. Echeverry, who is a member of the bank’s board of directors, insisted that it is necessary to intervene more aggressively with immediate sterilisation.

He explained that the exchange rate is still a worrying variable and that he’s asked the bank’s board to look into what other similar economies such as Peru are doing. He added that they can learn from other countries by having controlled inflation and aggressive intervention.

The peso is currently one of the strongest gaining currencies in the world, firming around 8.5 per cent to date this year but in the past month the climbing trend has calmed because of concerns over the eurozone crisis. Latin America has absorbed massive sums of money as investors seek higher yields in what a number of investors have described as a “global currency war”.