Can Colombia win its currency war?

The recent rapid appreciation of the Colombian peso bears all the hallmarks of so-called ‘Dutch Disease’. But while policymakers are rightly concerned about the implications for the competitiveness of non-commodity sectors, there is little they can do to weaken the peso. The best hope in the short-term may be that commodity prices fall. In the long-term, however, structural reforms will be key to accommodating a stronger currency.