Peru Sol Declines to 10-Month Low as Humala Weighs Repsol StakeJohn Quigley
Peru’s sol sank to a 10-month low after President Ollanta Humala said the government may purchase shares in Repsol SA’s local unit, fueling concern he plans to increase state control of the economy.
The sol dropped 0.6 percent to 2.6530 per U.S. dollar at 12:35 p.m. in Lima, the weakest level on a closing basis since July 2, according to prices from Datatec. The sol tumbled 1.7 percent last week in the biggest five-day decline since October 2009 as a plunge in commodities prices damped the outlook for the Latin American country’s exports.
The currency dropped today after Humala said in a TV interview that Peru is considering buying a minority stake in Refineria La Pampilla SA, operator of a refinery that was bought by Repsol during government asset sales in the 1990s.
“Foreigners are not happy about all this” and may be cutting back their sol holdings, Pedro Tuesta, a Washington-based Latin America economist at 4Cast Inc., said in a phone interview. “It’s a show of no confidence. Peru has been lauded for growing without any government intervention.”
Finance Minister Miguel Castilla told the state news agency Andina that he hadn’t resigned after the Lima-based Expreso newspaper said he may have quit in protest over the government’s plan to purchase Repsol’s assets.
Randa Mussallam, a spokeswoman at the president’s office, didn’t immediately return a call and an e-mail seeking comment.
The yield on the nation’s benchmark sol bond maturing in August 2020 was little changed at 3.74 percent, according to data compiled by Bloomberg. The price declined 0.1 centimo to 125.80 centimos per sol.