Colombia central bank head rules out intervening if peso falls

LONDON (Reuters) – Colombia has no plans to intervene in its currency markets even if the peso depreciates by 10-15 percent, central bank governor Juan Jose Echavarria told Reuters on Tuesday.

Like most emerging currencies, Colombia’s peso has weakened this year as the dollar has strengthened amid steady rate rises by the U.S. Federal Reserve. But the peso’s falls have been far less severe than peers in Argentina, Turkey, South Africa or Mexico.

While there are fears Colombia’s big current account deficit makes it vulnerable to contagion, Echavarria ruled out intervention.

“Absolutely not, even if we have a devaluation of 10 or 15 percent,” he said in an interview. “10 percent (devaluation) is no problem at all.”

The governor said he did not at this stage envisage raising interest rates either, even next year, but added that “a lot depends on the exchange rate”.

Echavarria also saw no reason for the Fed to be swayed in its policy decisions by the woes of emerging markets.

“They have to do their job, every country has to do their job. I don’t think (Fed Chair Jerome) Powell will increase or decrease interest rates because of emerging markets. The best thing for emerging markets is that the Fed does what they need to do for inflation and growth.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.