MercoPress. South Atlantic News Agency

Colombia to apply capital inflow restrictions to combat the stronger Peso

President Juan Manuel Santos and the greenback

The Colombian government announced it would restrict the inflow of dollars into the country, one of several measures to try and prevent the local Peso from appreciating against the greenback, which this year already reached 14%.

“Funds which Colombia’s government owned oil company Ecopetrol supplies to the Treasury, from now on will be deposited overseas”, said Finance minister Juan Carlos Echeverry.

He added that restricting the inflow of foreign funds into the country is one of several measures that the administration of President Juan Manuel Santos is implementing to contain the revaluation of the Colombian peso against the US dollar.

The Colombian central bank will also adopt additional measures to try and contain the appreciation of the local currency against the US dollar, according to official sources.

President Santos met this week in Bogotá with outstanding local and regional experts, among which Argentina’s former Economy minister Domingo Cavallo and Peru’s Pedro Pablo Kuczynski, which whom he discussed different options to avoid the US dollar liquidity from flooding Colombia and forcing the revaluation of the Peso.

President Santos has repeatedly stated his concerns with the ever stronger Colombian peso (14% higher so far this year) and the impact it has on overall trade, exports/imports and the creation of jobs, which was one of his electoral campaign promises in a country with a long history of double digit unemployment (currently 11.2%).

Colombian exporters, farmers and other business sectors have been protesting about the consequences of a strong Peso.