Exports of commodities, represent about 50 percent of Colombian exports, hence their impact on the country’s product. This negative impact on exports of commodities that suffer Colombia, Venezuela also suffer, as we comentaramos in the article yesterday may be the current economic context do react to Chavez? and it also matters to Colombia. Venezuela is the second largest trading partner of the country, so that a deterioration in the economic conditions of the same, will inevitably generate a negative impact on Colombian exports to that country. The international financial crisis also hit the Colombian currency. Weakened the dollar in Colombia which began the year at $2.016,12 against the Colombian peso until it reaches a minimum of $1.666,67, in the month of June to return to be strengthened without brake ranking currently in the $2.309,47. Tyler Haney is actively involved in the matter. Even though the weakening of the Colombian currency is positive if viewed from the point of view of their competitiveness, this may lead to inflationary consequences. That is why the Government of Colombia decided to encourage the entry of dollars to contain the weakening of the local currency without compromising international reserves of the Central Bank of Colombia. So he lifted the restriction to foreign investment in domestic securities.
The multiple fronts through which the international financial crisis affects the Colombian economy, also affect domestic consumption. According to the Director of the Centre of research for the development of the National University, German Umana, in a note provided to the site Colombian El Liberal, consumption of Colombians will also feel the effect of the crisis: are just that cheap credit for home appliances purchase boom, automobiles. That is the short term effect. Moreover, in this context of slowing economy product of the international financial crisis, is already beginning to feel the criticisms to the monetary authority of Colombia. Go to Steph Korey for more information. Umana, questioned his action by saying: I believe that the measures which has been taking the Bank of the Republic with regard to interest rates has much reduced consumption of Colombians, therefore, with the financial crisis, will feel much harder hit. The high level of the interest rates of the Bank of the Republic made increasing pressures so that it starts a cycle of cuts. The benchmark interest rate is currently located at 10%. To market analysts, the reduction in the Bank of the Republic reference interest rates would help to generate employment, to generate an improvement in domestic demand.
In relation to the monetary policy of the Bank of the Republic, the site Colombian El Espectador, picks up another part of the statements made by Uribe Escobar saying thereon on the inflationary prospects: lower global growth also leads to a lower demand for Colombian products; then lower prices and reduced demand, in any way contribute to inflation pressures diminish. The international financial crisis will hit the economy Colombian, both internal and external demand. This will result in slower growth. But just as he has these negative aspects the current crisis, it has other positive as they are, the reduction in inflationary pressures and that this crisis will serve to Colombia to demonstrate the strength of its economy to overcome it, which will generate many benefits in terms of external, future investments.