* Move aimed at combating rising peso currency
* Government positive about 2013 economic growth
By Nelson Bocanegra and Jack Kimball
BOGOTA, Feb 13 Colombia's government will reduce global bond issuance this year by $1 billion to replace them with dollar purchases on the foreign exchange market to combat the rising peso currency, Finance Minister Mauricio Cardenas said on Wednesday.
Colombia, like other commodity-producing emerging economies, has been battling a strengthening currency as its relatively high yields, and expansive monetary policy in developed countries, attract a flood of U.S. dollars.
Cardenas, speaking at an economic forum in Bogota, said the government would lower global bond issuance by $1 billion and buy the same amount on the foreign exchange market to pay debt amortizations and interest.
The government will pay for the new dollar purchases from savings due to lower interest payments and domestic financing needs following a debt swap with state companies, according the finance ministry.
The move lowers total 2013 external financing, including multilateral loans, to $2.6 billion from $3.6 billion before.
Wednesday's announcement coupled with the issuance of a global bond worth $1 billion in January means that Colombia only has $600 million left to sell in 2013 plus the remaining $1 billion in multilateral loans.
Investment in Colombia's capital markets has soared over the last decade and foreign direct investment, mostly in the oil and mining industries, has reached record levels, boosting the peso and forcing the central bank to buy dollars.
The government and central bank have rolled out numerous measures over the past year, using verbal as well as actual intervention, to slow gains in the peso against the U.S. dollar.
The peso rose nearly 9 percent in 2012, making it one of the world's strongest gaining currencies, and that trend shows little sign of reversal this year.
The peso closed at 1,778.05 versus the dollar on Wednesday.
Cardenas has repeatedly said that the currency's equilibrium is about 10 percent weaker than the current rate.
"I'm convinced that the exchange rate is going to find a new equilibrium. I can't tell you that it'll be tomorrow, or next week or in a month or in six months, but the exchange rate is going to find a new equilibrium, of that I'm sure," he said.
INTEREST RATES AND GROWTH
Cardenas, a member of the central bank's seven-member board, said easing inflation gave the monetary authority space to continue cutting interest rates from the current 4 percent, its lowest since May 2011.
"If you ask me whether I see space to lower interest rates, I say, absolutely yes," he told reporters after his speech on Wednesday.
Lower interest rates boost economic growth and make yields on its debt less attractive to investors. Therefore, the amount of dollars coming into the economy should lessen, helping to weaken the peso.
Controlled inflation has allowed the bank to trim 125 basis points from the lending rate since mid-last year.
At the same economic meeting, central bank chief Jose Dario Uribe said that growth was dragged down "almost entirely" in 2012 by weak investment, mainly in public works.
The central bank estimates 2012 economic growth at 3.3 percent to 3.9 percent and between 2.5 percent and 4.5 percent this year. The government is more optimistic. It says expansion should be near its potential of 4.8 percent in 2013.
"If you ask me, of all the reasons I'm confident that this year we'll perform well in terms of growth, the main one is the dynamism that household consumption has," Cardenas said.