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Peru’s Sol Rises From Three-Month Low as Dollar Squeeze Eases

Feb. 22 (Bloomberg) -- Peru’s sol rose from a three-month low after dollar inflows increased, easing a shortage of greenbacks as local banks met reserve requirements.

The sol appreciated 0.2 percent to 2.5842 per U.S. dollar at 12:50 p.m. in Lima, the most on a closing basis since Feb. 12, according to data compiled by Bloomberg. The currency closed yesterday at 2.5890, the weakest level since Nov. 23.

Demand for soles rose as exporters paid local taxes and amid a rally in global stocks after German business confidence increased to a 10-month high. Inflows alleviated a scarcity of dollars that occurred as the central bank increased purchases of U.S. currency and raised reserve requirements this month, according to Gonzalo Navarro, the head trader at the local unit of Banco Santander.

“The rebound in international markets and the dollar flows” prompted local banks to sell some of their U.S. currency holdings, Navarro said.

The yield on Peru’s 7.84 percent sol-denominated bond due in August 2020 dropped one basis point, or 0.01 percentage point, to 3.76 percent, according to data compiled by Bloomberg. The price increased 0.06 centimo to 126.22 centimos per sol.

To contact the reporter on this story: John Quigley in Lima at jquigley8@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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