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

Petro Government Reportedly Seizing Moment to Boost Dollar Reserves Through Exchange Market Purchases

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.