Peru: Peruvian sol hits 3.00 per USD barrier
January 16, 2015
The Peruvian sol (PEN) continues to lose value against the dollar. On 15 January, the sol traded at 3.00 PEN per USD, which was 1.2% weaker than on the same day last month and 6.9% weaker on an annual basis. Moreover, this was the first time in more than five years that the sol hit the 3.00 per USD mark.
The ongoing depreciation comes amid a weakening outlook for the Peruvian economy. Moreover, the slide also reflects falling commodity prices and markets’ expectation of a full normalization of monetary policy in the United States later this year. These external factors are decreasing demand for emerging market assets and currencies, such as the Peruvian sol.
The Peruvian Central Bank has responded through repeated interventions in the foreign exchange market. The Bank continues to sell US dollars in the local market and reduce average reserve requirements to prop up the sliding sol.