Colombia’s peso changes course again, drops to 1,901 against dollar

[Judi Lynn]

Colombia’s peso changes course again, drops to 1,901 against dollar
posted by Adriaan Alsema
Aug 16, 2013

Colombia’s peso changed course again on Friday, weakening to 1,901.3 to the dollar on after a surprise rally to a 2-month low of 1,872.91 last week.

Colombia’s central bankers, Finance Minister Mauricio Cardenas and President Juan Manuel Santos have become obsessed with keeping the peso weak in the face of a flood of foreign investment, a shrinking manufacturing export sector and a moribund agriculture industry.

The Colombian government has promised to help pull manufacturing industries back into vitality. Right now, companies like automobile manufacturer Chevrolet are seeing sales fall. An erosion in industrials is one reason why the fall down to a 2-month low stoked some worry among Colombia’s officials and analysts.

“I was not expecting it,” Foreign Exchange Analyst Andres Fletcher at Bogota-based brokerage Ultrabursatiles told Colombia Reports.

More:http://colombiareports.com/colombias-peso-changes-course-again-drops-to-1901-against-dollar/

[Socialistlemur]

1. Excellent news for Colombia

Colombia benefits from a weaker peso, it helps exports. The Colombia central bank has been buying dollars to try to keep the peso down. Brazil has a similar policy but they use interest rates as well. The imbalance is caused by too much forex coming from outside investors. Too much foreign investment can strengthen the currency so much it makes the country uncompetitive and hurts local manufacturing and agriculture.