Peru’s Sol Falls Most in Two Years After Growth Misses Forecast

Peru’s sol slumped the most in two years after a report showed economic growth slowed in March more than analysts forecast.

The sol dropped 1 percent to 2.6290 per U.S. dollar at today’s close, the weakest level on a closing basis since May 2, when it fell to a 10-month low, according to prices from Datatec. Today’s decline was the steepest since June 2011.

Economic activity expanded 3 percent in March from a year earlier, the slowest pace since October 2009, the national statistics agency said today. The median forecast of 13 economists surveyed by Bloomberg was for 4.5 percent growth. Manufacturing output contracted and construction and retail growth slowed, the agency reported.

“The economic data were really surprising,” said Hedmond Rios, an economist at Celfin Capital in Santiago. “We should see a shift in monetary policy via a relaxing of reserve requirements.”

Peru’s central bank raised reserve requirements four times from January through April to curb demand for dollar loans. Policy makers have kept the target lending rate at 4.25 percent since May 2011.

The yield on the nation’s benchmark 7.84 percent sol bond due in August 2020 declined three basis points, or 0.03 percentage point, to 3.79 percent at 2:43 p.m. in Lima, according to data compiled by Bloomberg.

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