Colombia President Juan Manuel Santos said Saturday said he's worried about weakness in the U.S. dollar--a concern also voiced by Brazil--because he said it makes Latin American exports less competitive overseas.
Santos, participating in a forum with U.S. President Barack Obama and his Brazilian counterpart Dilma Rousseff, warned the expansive monetary policy in much of the developed world, in which the U.S. and other countries essentially print money in excess to pay their bills, is "exporting the (economic) crisis to us."
His comments, made during a conference at the Summit of the Americas in Cartagena, followed similar comments earlier in the day by Brazil's Rousseff, in which she said her country needs to take more measures to defend itself from the weakness of the dollar.
Rousseff said highly accommodative monetary policy the U.S. Federal Reserve, which acts independently of the U.S. government but is subject to congressional oversight, has flooded emerging markets such as Brazil with dollars, causing harmful global economic imbalances.
Santos said despite the problems caused by the weak dollar, Colombia will stay focused on boosting its exports and increasing trade with the rest of Latin America and the U.S. A free trade agreement between the U.S. and Colombia is expected to go into effect later this year.
Both Brazil and Colombia have taken extraordinary measures in recent years to try and stop their currencies from strengthening too much against the dollar in free-floating foreign exchange markets. A strong local currency makes a country's exports much more expensive in overseas markets, often times preventing exporters from being able to sell their products.
In the case of Colombia, the local central bank for much of the past two years has bought $20 million each day in the foreign exchange market to mop up excess dollars. The Colombian government also instructed its national oil company Ecopetrol (EC, ECOPETROL.BO) this year to hold off on repatriating more than a $1 billion in overseas dollar profits from the sale of crude oil, its top export.
Such measures, though, haven't been enough. The peso closed Friday's trading session at COP1,776.20 for a dollar and is 9% stronger against the U.S. currency in 2012, making it one of the fastest-rising currencies in the world.
-By Darcy Crowe and Dan Molinski, Dow Jones Newswires; 57-310-867-6542; [email protected]