Reuters: US Dollar Report: Colombia central bank, govt seek peso at 1,800 - lawmaker

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Colombia central bank, govt seek peso at 1,800 - lawmaker Aug 1st 2012, 16:28 By Carlos Vargas BOGOTA | Wed Aug 1, 2012 12:28pm EDT BOGOTA Aug 1 (Reuters) - Colombia's central bank and the government will seek to maintain the peso currency at an average of 1,800 per U.S. dollar and prevent it from strengthening further, a senior member of the economic commission of Congress said on Wednesday. The monetary authority, which already buys at least $20 million a day on the spot market to ease gains in the peso, has faced pressure from the government in recent months to take tougher measures to stem the world's strongest currency. "The exchange rate should be held at all costs at 1,800 pesos, that's like a goal of the central bank, and that's the suggested message in the budget project," the lawmaker told Reuters after a meeting of the economic commission and the central bank's board. The Colombian peso strengthened 0.32 percent to 1,786.3 per dollar in trading on Wednesday. The bank, which does not discuss publicly an ideal level for the currency, on Friday resisted pressure from Finance Minister Juan Carlos Echeverry to be more "aggressive" in its dollar purchases. A strong peso hurts exporters and some manufacturers because they earn in dollars but pay costs in pesos. The government last week presented to Congress a 2013 budget worth 185.5 trillion pesos ($103.6 billion) and set the currency goal at 1,800 per dollar. According to a report by the finance ministry, the central bank could boost reserves to as much $53.5 billion reserves, up from $34.3 billion currently, and intervene more heavily in the currency market. Record foreign investment inflows have helped boost the value of the peso 7.8 percent so far this year, the most among 152 currencies tracked by Reuters. The central bank last week cut the benchmark lending rate for the first time in more than two years by a quarter point to 5 percent to counter fallout from the global economic crisis on domestic economic growth. Echeverry, who represents the government on the central bank's board, had sought a bigger cut to help stimulate the slowing economy and called on the board to increase the level of daily dollar purchases to ease gains in the peso. Central Bank Chief Jose Dario Uribe said on Monday the economy should grow at least 4 percent this year but lowered the forecasted range to between 3 and 5 percent from an earlier estimate of 4 to 6 percent. He said the bank views next year's economic outlook with more uncertainty as the global financial crisis hits the Andean nation's industrial output and exports. The bank forecasts growth next year at between 2 and 5 percent. Link this Share this Digg this Email Reprints

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