Colombia finmin seeks prayers to ease peso gains amid record FDI
BOGOTA Aug 9 (Reuters) - Foreign direct investment in Colombia could reach $17 billion this year, Finance Minister Juan Carlos Echeverry said on Thursday, calling on industrialists to "pray" that the central bank boosts dollar purchases to stem gains in the currency.
Investment in the Andean nation's oil and mining industries has reached record levels in the past several years, bolstering the value of the peso, which has been one of the strongest gaining currencies among 152 tracked by Reuters.
"If God is great, let the central bank buy more dollars; praise the Lord, pray, go to mass," Echeverry joked to industrialists at a conference in the coastal city of Cartagena.
"The exchange rate hurts a lot, but it's incredible that during an international crisis our problem is the appreciation of the peso."
A global crisis would "normally" devalue the currency to as much as 2,200 per dollar, he said. The peso was trading at 1,788.55 versus the dollar on Thursday.
A military crackdown on drug-funded insurgent groups has made Colombia much more attractive to investors, once fearful of visiting the nation as Marxist FARC rebels and paramilitary groups bombed corporate installations and kidnapped workers.
Even as the government trumpets the foreign investment figures, Echeverry again pressured the central bank to be more aggressive in its handling of monetary policy in a bid to ease gains in the peso of up to 8 percent so far this year.
A strong peso hurts exporters and some manufacturers because they earn in dollars but pay costs in pesos.
"I've been doing my work the best I can, but my ability hasn't been sufficiently strong" to convince the board, said Echeverry, who represents the government on the central bank's seven-member board of directors.
Echeverry said on Wednesday the monetary authority should step up dollar purchases to $40 million to strengthen its arsenal to fight the gaining peso. The bank currently buys at least $20 million a day on the spot market.
According to a report by the finance ministry, the bank could boost reserves to as much $53.5 billion, from $34.3 billion now, and intervene more heavily in the currency market.
The bank, which does not publicly discuss an ideal level for the peso, has pledged to maintain the currency at an average of 1,800 per dollar, according to a senior lawmaker who attended a recent meeting with the bank.
The central bank last month 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 had sought a bigger cut to help stimulate the economy, which is beginning to slow.
The central bank expects the economy to grow at least 4 percent this year but lowered its forecast range to between 3 and 5 percent from an earlier estimate of 4 to 6 percent.
This year's foreign investment estimate is about 28 percent above the level the economy attracted in 2011 and comes even as the global financial crisis trims corporate spending in many developed nations.
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