Peru Sol Falls to Three-Month Low as Banks Buy Dollars

Peru’s sol fell to its weakest level in three months as banks boosted dollar purchases to meet increased reserve requirements.

The sol depreciated 0.3 percent to 2.5962 per U.S. dollar at 12:05 p.m. in Lima, the lowest since Nov. 21, according to prices compiled by Bloomberg. The currency was headed for a 0.6 percent weekly decline.

Banco Central de Reserva del Peru on Feb. 27 raised dollar reserve requirements for a third time this year to slow credit expansion and weaken the sol. The increases, combined with the central bank’s $3.4 billion of U.S. currency purchases this year, are making lenders reluctant to bet against the greenback, said Antonio Diaz, a trader at Banco Internacional del Peru.

“We know the central bank is there with measures, that it’s in the market when it has to be,” Diaz said in a phone interview from Lima. “The ‘sell, sell, sell’ strategy has changed. Things are more balanced.”

The Finance Ministry has pledged to buy at least $4 billion this year to curb gains in the sol, which appreciated 5.7 percent in 2012, the fastest pace since 2009. Today’s fall extends the local currency’s drop this year to 1.7 percent.

Copper, Peru’s top export, fell after manufacturing growth slowed in China, the world’s biggest industrial metals user.

The yield on the nation’s benchmark 7.84 percent sol-denominated bond due August 2020 fell three basis points, or 0.03 percentage point, to 3.73 percent, according to prices compiled by Bloomberg. The price increased 0.22 centimo to 126.32 centimos per sol.

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