May 13, 2014 / 3:20 PM / 3 years ago

Colombia treasury to buy dollars to limit peso's strengthening

BOGOTA, May 13 (Reuters) - Colombia’s treasury plans to buy dollars in the foreign exchange market to limit the strength of the peso, Finance Minister Mauricio Cardenas said on Tuesday.

“Priority: competitive dollar for the benefit of the country. Treasury to resume purchase of dollars as it deems necessary,” Cardenas wrote on Twitter.

The peso weakened 0.47 percent against the dollar on Monday after the treasury bought dollars on the local market and it softened a further 0.32 percent in trade early on Tuesday to 1,919.65 per dollar.

Cardenas suggested last week that the government could begin making dollar purchases on top of up to $1 billion the central bank is buying from April to the end of June, to compound efforts to weaken the peso.

The peso has rallied 6 percent since mid-March when investment bank J.P. Morgan announced it would raise the weighting of Colombian bonds in its indexes, a decision which analysts believe could draw between $4 billion and $10 billion of foreign cash into the country’s financial markets over the next year. (Reporting by Nelson Bocanegra; Writing by Peter Murphy; Editing by Chizu Nomiyama)

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