Peru Sol Falls as Central Bank Buys Dollars to Boost Volatility

Peru’s sol fell to a one-week low as German business confidence sank and the central bank increased the price it paid for dollars in the spot market.

The sol depreciated 0.1 percent to 2.5840 per U.S. dollar at today’s close, according to Deutsche Bank AG’s local unit.

The central bank bought $60 million in the spot market and said on its website it paid 2.5833 soles per dollar, compared with 2.5819 yesterday. The central bank is buying U.S. currency every day as part of its strategy to increase sol volatility and slow growth in dollar-denominated loans, said Mario Guerrero, an economist at Scotiabank Peru.

“In the last two days the central bank has bought dollars, even though the sol hasn’t been strengthening,” Guerrero said. “It’s created a bit more volatility intraday.”

The yield on Peru’s benchmark 6.55 percent dollar- denominated bond due March 2037 fell two basis points, or 0.02 percentage point, to 3.53 percent, according to Bloomberg prices. The price rose 0.5 cent to 149 cents per dollar.

German business confidence dropped to the lowest in more than 2 1/2 years.

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