Peru Sol Posts Biggest Monthly Drop Since 2008 on Copper View

Peru’s sol had its steepest monthly decline since October 2008 on concern Europe’s debt crisis may hurt global growth and damp exports from the third-largest copper producer.

The sol weakened 0.1 percent to 2.7075 per U.S. dollar at today’s close, from 2.7050 yesterday, taking its decline since April 30 to 2.7 percent, according to Deutsche Bank AG’s local unit. That’s the steepest monthly fall since October 2008, data from Peru’s financial regulator show.

The Andean country’s central bank sold $277 million in the spot market today after the sol touched 2.7110, its weakest level since Nov. 29. Copper, Peru’s top export, fell as signs of slowing growth in the U.S. and China added to concern the euro- zone crisis will damp demand for raw materials.

“Growth in China is decelerating and you have an increasingly uncertain outlook in the U.S.” said Marjorie Hernandez, a currency strategist at HSBC Holdings Plc in New York. “Peru is extremely dependent on metals. The Chinese growth story weighs heavily on countries that depend so much on one product.”

First-time claims for unemployment insurance payments in the U.S. increased by 10,000 to 383,000 in the week ended May 26, Labor Department data showed today. A Chinese government purchasing managers’ index for May due tomorrow may decline to 52 from 53.3 a month earlier, according to the median estimate of 27 economists in a Bloomberg survey.

The yield on Peru’s benchmark 7.84 percent sol-denominated bond due August 2020 rose four basis points, or 0.04 percentage point, to 5.33 percent, according to prices compiled by Bloomberg. The price fell 0.28 centimo to 116.41 centimos per sol.

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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