Peru Exchange Rate

Peru

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.

LatinFocus Consensus Forecast panelists expect the sol to depreciate further in 2015, with the exchange rate ending the year at 3.09 PEN per USD. For 2016, the panel sees the sol trading at 3.14 PEN per USD.


Author: Ricard Torné, Lead Economist

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Peru Exchange Rate Chart


Peru Exchange Rate January 2015

Note: Exchange rate, PEN per USD (eop).
Source: Central Bank (BCRP, Banco Central de Reserva del Peru)


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