Peru’s Sol Gains Most in Four Months on Signs of China Rebound
Peru’s sol posted its biggest rally in four months on evidence of stronger growth in China, the largest buyer of the Andean country’s metals and fishmeal.
The currency surged 0.7 percent to 2.7730 per U.S. dollar at the close in Lima, the most since May 3, according to prices from Datatec. The sol touched a three-year low on Aug. 19.
The improved outlook for China and intervention by Peru’s central bank to support the currency may have spurred a foreign investor to make a large sol purchase today, according to Gonzalo Navarro, the head trader at the local unit of Banco Santander SA.
“The latest data from China encouraged someone to take a bet on emerging markets including Peru,” Navarro said in an e-mailed response to questions. The central bank will probably resume dollar sales if the sol depreciates to 2.80, he said.
China’s economy will expand 7.6 percent this year, up from a forecast of 7.5 percent, UBS AG said today. Peru’s exports to China fell 28 percent in July, the Andean country’s statistics agency said yesterday.
The central bank didn’t buy or sell dollars today. It has sold $3.3 billion in the local market since July 2.
The yield on the nation’s benchmark 7.84 percent sol bond due in August 2020 fell seven basis points, or 0.07 percentage point, to 5.66 percent at 2:58 p.m. in Lima, according to data compiled by Bloomberg.
To contact the reporter on this story: John Quigley in Lima at email@example.com
To contact the editor responsible for this story: David Papadopoulos at firstname.lastname@example.org