Peru Sol Posts Biggest Weekly Drop Since ’09 as Commodities FallSebastian Boyd
Peru’s sol tumbled, extending its weekly decline to the biggest in almost four years, as commodity prices fell on concern growth in the world’s largest economies is slowing.
The sol depreciated 0.8 percent to 2.6380 per U.S. dollar at the close in Lima, according to prices from Datatec. The sol slid 1.7 percent this week, the most since October 2009.
“It’s a delayed reaction to the decline in commodity prices,” Felipe Hernandez, an economist at Royal Bank of Scotland Group Plc, said in a telephone interview from Stamford, Connecticut.
Commodities extended a three-month drop as the U.S. Commerce Department reported that the world’s largest economy expanded in the first quarter less than economists had forecast. The 14-day relative strength of the exchange rate was higher than 70, indicating the sol’s decline may be hard to sustain.
The currency’s drop boosts the chance that the central bank may intervene to strengthen the sol, economists Benito Berber at Nomura Holdings Inc. and Alejandro Cuadrado at Banco Bilbao Vizcaya Argentaria SA said this week.
“The government has taken a lot of measures to create a scarcity of dollars,” said Sebastian Brown, a strategist at Barclays Plc in New York. “Growth was disappointing in February, and that has left them particularly vulnerable to a change in global sentiment.”
Peru’s economic activity rose 5 percent in February from a year earlier after a 6.2 percent increase in January, the national statistics agency reported this month. The median forecast of 12 analysts surveyed by Bloomberg was 5.9 percent.
The yield on the sol bond maturing in August 2020 was little changed at 3.74 percent today and was up seven basis points for the week.