Julio Romero toassured that some measures of the Bank of the Republic could help curb the accelerated appreciation of the dollar.
“The Colombian peso has depreciated strongly and rapidly, not only against the dollar, but also against other currencies of developed countries, Latin American and tankers. This currency depreciation presupposes additional inflationary pressures that will become apparent within six to nine months,” said the expert.
Keep in mind from the foregoing that the Board of Banrepública must act decisively at its monetary policy meeting this week.
“We hope the decision includes an intervention rate hike of at least 150 basis points,” he said.
In addition, the central bank must express its commitment to take the actions it deems appropriate to monitor in the future inflationno inflation expectations
It proposes to activate the intervention mechanism in the foreign exchange market through options to control the volatility of the exchange rate.
This can be done through an option auction mechanism that allows the foreign exchange market to buy and sell dollars in installments when the exchange rate is very volatile. This gives liquidity to the system and reduces volatility.
“This allows an agent to have dollars today with a commitment to sell them in 20 or 30 days, easing the cash flow of intermediaries,” he explained.
Source: El heraldo
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
