Colombia weathers falling oil prices and depreciating peso

The value of Colombia’s peso continued to fall this week, dragged down by the lower prices of oil, Colombia’s biggest export. The currency plummeted to its lowest rate against the dollar since it started trading freely in 1999. Bloomberg noted that the central bank is split between those who fear the risk of inflation and want to raise interest rates and those who are more worried about slower growth. Ultimately, the central bank decided to maintain the interest rate at 4.5%.

The Financial Times at least praised Colombia’s handling of the current oil crisis, contrasting the Colombian government’s response to that of Russia and Brazil. The article praised Colombia for its stable policymaking, which has allowed Colombia to maintain its interest rates alongside the rapid depreciation of its currency, meaning that Colombia’s oil revenues in Colombian pesos have fallen relatively little despite the collapse in global prices. Thanks to this clearheaded policymaking, the Colombian economy is expected to grow by 3.4%, which though less than last year’s 4.6% growth, is far better than the recessions in store for Russia and Brazil.

In mining-related news, Colombian daily El Espectador published an analysis piece tracing the route that Colombia’s gold exports take out of the country.  The Colombian government knows that a large part of the gold that leaves the country is mined illegally, with 72% of the 310.3 tons of gold exported by Colombia in the last 5 years going to companies from the United States, and 83% of gold coming from unauthorized mines.