May 14 (Bloomberg) -- Peru’s sol dropped the most since September as Greece’s political crisis fueled concern Europe’s debt turmoil will intensify, curbing demand for higher-yielding assets in emerging markets.
“When you start talking about a credit event like a Greek default, foreigners sell everything, including the Peruvian sol,” said Diego Donadio, a Latin America strategist at BNP Paribas Brasil in Sao Paulo.
The sol depreciated 0.6 percent to 2.6690 per U.S. dollar today, the currency’s steepest decline since Sept. 21.
The currency also weakened as investors let forward contracts expire and after the central bank’s May 1 increase in reserve requirements reduced dollar sales, according to Gonzalo Navarro, the head trader at Banco Santander in Lima.
The yield on the nation’s benchmark 7.84 percent sol-denominated bond due in August 2020 increased five basis points, or 0.05 percentage point, to 5.18 percent, according to prices compiled by Bloomberg. The price fell 0.39 centimo to 117.57 centimos per sol.
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