Colombian Treasury buying dollars to weaken the COP
The Minister of Finance posted a tweet announcing that the Treasury is going to buy USD to weaken the COP. The announcement had an important impact on the fx market today. However, the important question is the Treasury's capacity to intervene. For now, according to the Ministry, excess cash at hand will be used, and even though no detail about its size has been provided, we do not think they are of consequence. Also, the financing plan of the government for this year contemplates getting USD 2 billion in loans from multilateral institutions, out of which only USD 25 million have been disbursed, so another possible move, in our opinion, would be to partially substitute this lending with additional issuances in the local TES markets, and then use the COP to buy USD and meet interest and amortization payments on external debt. This second mechanism could have a higher impact, but does not provide steady ammunition for intervening over long periods of time.