Colombia's central bank will sell the government at least $1 billion in foreign reserves in the first quarter of 2005 to pay interest and prepay debt, a Finance Ministry official said on Friday. The sales come at a time when the central bank has been increasing reserves by buying dollars to keep the value of the peso from rising too much against the US currency.

"The announcement that the central bank will sell $1 billion to the government may be aimed at sending the message that demand for dollars by the government and the central bank will remain strong in the short term," said Carola Sandy, a sovereign strategist with Credit Suisse First Boston in New York.

Copyright Reuters, 2005