Peru’s sol posted its first weekly decline since November as the central bank stepped up dollar purchases to stem the local currency’s rally.
The sol weakened 0.3 percent to 2.5523 this week, according to prices compiled by Bloomberg. It fell 0.2 percent today. Peru’s sol has gained 5.5 percent in the past year, the most among the six most-traded currencies in Latin America.
The central bank bought $20 million in the spot market today, bringing the total purchased this week to $970 million. Banco Central de Reserva del Peru also said in a statement today that it raised the foreign portfolio limit for pension funds to 32 percent from 30 percent, which will allow the funds to invest an additional $750 million abroad.
Mining companies, which account for 60 percent of the country’s exports, are buying soles before an annual deadline for income tax payments in April. Accelerating growth in the Andean economy is also attracting foreign investment from abroad, according to Odar.
The yield on the nation’s benchmark 7.84 percent sol- denominated bond due August 2020 fell two basis points, or 0.02 percentage point, to 3.72 percent at 3:39 p.m. in Lima, according to prices compiled by Bloomberg.
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