Peru’s Sol Rises to One-Week High on European Bond Purchases

Peru’s sol rose to a one-week high after the European Central Bank stepped up bond purchases to address the region’s debt crisis, boosting demand for higher- yielding, emerging-market assets.

The sol rose 0.1 percent to 2.8220 per U.S. dollar at 1:47 p.m. New York time, from 2.8255 yesterday. The sol weakened 0.2 percent this week, its fourth straight weekly decline

The euro strengthened as the European Central Bank bought Portuguese and Irish debt today, according to people with knowledge of the transactions. ECB President Jean-Claude Trichet said yesterday the bank will maintain its bond-buying after policy makers extended stimulus measures to stem Europe’s “acute” market tensions.

“The ECB played it quite smartly,” said Dirk Willer, head of Latin American local markets strategy at Citigroup Inc. in New York. “They didn’t promise the market any big numbers but they intervened quite aggressively in the sovereign bonds. I don’t think there is anything Peruvian-specific that should stop a bit of a rebound” in the sol, Willer said.

The South American country’s central bank didn’t buy or sell dollars in the foreign exchange market or issue certificates of deposit redeemable in dollars.

The yield on Peru’s benchmark 7.84 percent sol-denominated bond due August 2020 rose 1 basis point, or 0.01 percentage point, to 5.95 percent, according to Deutsche Bank AG’s local unit.

To contact the reporter on this story: John Quigley in Lima at jquigley8@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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