Peru Sol Jumps Most Since 2013 on Measures to Bolster CurrencyJohn Quigley
Peru’s currency rallied as copper jumped and the country’s regulators took steps to curb a further decline in the sol after it sank to a nine-year low.
The sol strengthened 0.9 percent at 11:06 a.m. in Lima, the steepest gain on a closing basis since September 2013, according to Datatec prices.
Peru’s central bank on Thursday began selling repurchase agreements it said will ease pressure on the sol. The banking superintendency tightened limits on banks’ currency derivative trades, according to a statement in state newspaper El Peruano. Central bank general manager Renzo Rossini said Wednesday that foreign currency speculators were fueling the rout and said it’s the bank’s task to contain the volatility.
“The central bank has a mandate that isn’t necessarily aligned with what players in the market think,” said Juan Pablo Noziglia, the head trader at AFP Integra in Lima. “They’re going to do what they consider necessary to fulfill that mandate.”
The latest measures follow tighter limits on sol forward trading by local banks, announced by the central bank Aug. 21.
It’s hard to separate the impact of today’s announcements from the rally in emerging-market assets and copper, Peru’s biggest export, Noziglia said.
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