Petro Government Reportedly Seizing Moment to Boost Dollar Reserves Through Exchange Market Purchases
Improved country risk and increased investor interest explain the good performance in recent days. Photo: Freepik
TL;DR
- The Colombian government has reportedly resumed buying dollars in the spot market.
- This strategy aims to strengthen the nation's foreign currency reserves.
- The move is attributed to improved country risk and increased investor interest following recent elections.
- Colombia's country risk premium (5-year CDS) fell to its lowest level since late February.
- The Colombian peso has been the third-best performing currency globally this week.
- Approximately USD 600 million in dollars have been purchased in recent days, adding to previous acquisitions totaling USD 3.15 billion.
- Funds for these purchases may come from VAT and consumption tax collections, public debt issuance, and profits transferred from the Banco de la República.
- The accumulated foreign currency will be used to meet various government commitments, including a USD 1.35 billion bond maturing on March 22nd and a USD 9 billion financial instrument payment in July.