Peru’s central bank increased sales of dollar-linked securities after the sol fell to an eight-week low on bets the Federal Reserve will reduce U.S. monetary stimulus that has boosted demand for emerging-market assets.
Banco Central de Reserva del Peru sold 570 million soles in two-month, dollar-indexed certificates of deposit, the biggest such issuance since Aug. 20. The monetary authority sells the securities to increase lenders’ dollar holdings and slow the local currency’s depreciation. The central bank will probably sell dollars in the currency market if the sol continues to decline, said Roberto Flores, the head of research at Inteligo SAB, a Lima-based brokerage.
“The bank could sell a significant amount of dollars if there are sharp movements like we saw today and the sol touches or passes 2.80,” Flores said by phone from Lima.
The central bank sold $3.3 billion of dollars in the currency market during July 2 to Oct. 9.
Peru’s currency depreciated 0.4 percent to a two-month low of 2.7930 per U.S. dollar at the close of trading in Lima, pushing this year’s decline to 8.6 percent, according to prices from Datatec. The sol fell along with most of its emerging-market counterparts today as a gauge of U.S. service industries climbed more than forecast in October, adding to the case for the Fed to reduce monthly asset purchases designed to support growth and cap borrowing costs.
The yield on the nation’s 7.125 percent dollar bond due March 2019 rose five basis points, or 0.05 percentage point, to 2.85 percent at 2:59 p.m. in Lima, according to data compiled by Bloomberg. The price fell 0.34 cent to 121.215 cents per dollar.