April 9 (Bloomberg) -- Peru’s sol dropped from a seven-week high after the central bank doubled the pace of dollar purchases to slow gains in the local currency.
The sol depreciated 0.1 percent to 2.5780 per U.S. dollar at today’s close, according to prices from Datatec. The currency rallied yesterday to 2.5750, its strongest since Feb. 15.
Banco Central de Reserva del Peru said on its website that it bought $160 million today after purchasing $80 million yesterday to stem gains as companies exchanged dollars to pay income taxes in local currency.
The intervention isn’t likely to create shortages as “dollar liquidity is more comfortable this month,” said Gonzalo Navarro, the head trader at the local unit of Banco Santander SA.
The central bank sold 100 million soles in six-month and one-year certificates of deposit, according to its website. After buying dollars, the monetary authority issues the securities to absorb the extra soles from the market through a process known as sterilization.
The yield on Peru’s benchmark 7.84 percent sol bond due in August 2020 was little changed at 3.75 percent, according to data compiled by Bloomberg. The price was little changed at 125.85 centimos per sol.
To contact the reporter on this story: John Quigley in Lima at firstname.lastname@example.org
To contact the editor responsible for this story: David Papadopoulos at email@example.com