Peru’s central bank ratcheted up intervention in the foreign-exchange market after the sol fell to a three-month low on speculation the Federal Reserve will start to slow the pace of monetary stimulus.
Banco Central de Reserva del Peru sold $380 million today, the most for a single day this year after a sale of $600 million on Aug. 21, according to its website. The central bank has sold $4.7 billion since July to support the sol.
“There’s a growing probability that tapering will begin this month, as positive economic data has been coming out of the U.S,” Hugo Perea, the chief economist at BBVA Banco Continental, said by phone from Lima. “The central bank is going to keep intervening to prevent volatility from affecting the real economy.”
The Fed meets Dec. 17-18 to discuss policy after minutes of the last meeting in October showed officials may reduce the $85 billion in monthly bond buying if the economy improves as anticipated. U.S. manufacturing unexpectedly accelerated in November at the fastest pace since April 2011 while a private survey tomorrow may show employers boosted jobs last month by the most since June.
The sol depreciated less than 0.1 percent to close at 2.8050 per dollar, the weakest since Sept. 5, according to Datatec prices.
To contact the reporter on this story: John Quigley in Lima at email@example.com