Peru’s sol matched a four-week low as the central bank bought dollars to soak up supply from companies exchanging greenbacks for local currency to pay taxes.
The sol was little changed at 2.5535 per U.S. dollar at the close of trading in Lima, matching the weakest level since Dec. 26 that was set two days earlier, according to prices compiled by Bloomberg. The currency earlier gained as much as 0.2 percent. It has rallied 5.4 percent in the past year, the best performance after the Philippine peso and South Korean won among 25 emerging-market currencies tracked by Bloomberg.
Peru’s central bank bought $100 million in the spot market today, bringing the total purchased this month to $1.65 billion. Mining companies, which account for 60 percent of Peru’s exports, are buying soles before deadlines for income tax payments in March and April, according to Mario Guerrero, an economist at Scotiabank Peru SA.
“The central bank has been stepping up dollar purchases to ease the pace of gains in the sol,” Guerrero said in a phone interview from Lima. “We’ve seen a lot of dollar supply, especially from mining companies, more than what people were expecting.”
The yield on the nation’s benchmark 7.84 percent sol-denominated bond due in August 2020 rose two basis points, or 0.02 percentage point, to 3.74 percent at 2:48 p.m. in Lima, according to prices compiled by Bloomberg.