Peru’s central bank bought $833 million in the currency market this week, the most in two months, as policy makers seek to stem gains in the sol spurred by surging foreign investment.
The purchases are the most since the week ending Feb. 10 when it bought $966 million and come after inflows pushed the sol to its strongest level in 15 years.
“Big investment projects are underway and as they advance they’re bringing in dollars,” Antonio Diaz, a trader at Banco Internacional del Peru, said in a phone interview from Lima. “The central bank is the biggest buyer in the market.”
Companies may have brought forward their dollar sales on the expectation the U.S. currency will continue to lose ground against the sol, Diaz said. Almost $1.5 billion changed hands yesterday, more than twice the amount traded in the previous session, according to the central bank.
Peru will expand 5.7 percent this year, the most among Latin America’s biggest economies, central bank president Julio Velarde said March 23. The bank raised its growth forecast from 5.5 percent as improved business confidence boosts the outlook for private investment. Mining and energy will account for 60 percent of the $35 billion in investment projects expected this year and next, according to the bank.
The sol was little changed at 2.6580 per U.S. dollar at today’s close, from 2.6590 yesterday, according to Deutsche Bank AG’s local unit. It earlier touched 2.6560, the strongest level since October 1997, data from Peru’s financial regulator show.
The central bank has bought $6.59 billion this year, including $165 million today, compared with $3.51 billion purchased in all of 2011. The purchases buoyed the nation’s foreign currency reserves to $56.9 billion on April 11 from $49 billion on Dec. 31, according to the bank’s website.