Peruvian Sol Advances on Moody’s Rating Increase Speculation

Peru’s sol was the only major emerging-market currency to strengthen against the dollar as speculation that Moody’s Investors Service may raise its rating on the country’s debt attracted foreign investors.

The sol appreciated 0.1 percent to 2.6360 per U.S. dollar, according to prices compiled by Bloomberg. It had depreciated 0.7 percent on July 20 as the central bank paid off maturing debt.

There have been “greater inflows of dollars from foreign investors moving into sovereign bonds, particularly since Moody’s said it would revise its rating on Peru.” said Mario Guerrero, an economist at Scotiabank in Peru. “It’s a little different from what happened in the rest of the region.”

The yield on Peru’s benchmark bonds due in 2020 rose seven basis points to 4.67 percent today, according to Citigroup Inc.’s local unit. The yield on the bonds reached 4.53 percent on July 16, the lowest since they were first sold in 2005.

Moody’s will decide whether to lift Peru’s Baa3 rating within the next few months, Aaron Freedman, a senior analyst at the company in New York, said today. Moody’s has a positive outlook on the rating, which is the lowest investment-grade ranking.

“The country has continued to perform very strongly since the time we assigned the outlook,” Freedman said in a phone interview today. “It is hard to say with certainty what the probability of an upgrade is but the risks, if you want to call them that, are weighted to the upside.”

Freedman earlier spoke to Contact, the magazine of the American Chamber of Commerce of Peru, in comments that were reproduced by local media in Lima.

To contact the reporter on this story: Sebastian Boyd in Santiago at sboyd9@bloomberg.net

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

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