Peru: Sol continues to strengthen in April
April 30, 2012
On 30 April, the Peruvian sol (PEN) traded at 2.64 per USD, which was 1.0% stronger than in the last day the previous month and marked, in fact, the strongest end of period level in over 15 years. In annual terms, the sol has gained 6.6% compared to the same month last year. Following an almost uninterrupted upward trend, the strong appreciation of the PEN in April mainly reflected that households and firms are gradually switching their savings from U.S. dollars to soles. Meanwhile, the Central Bank (BCRP) continues to intervene in the foreign exchange market to stem gains in the sol. The Bank has purchased USD 8.0 billion so far this year, including a USD 830 million purchase on 10 May. The BCRP has already surpassed the USD 3.5 billion purchased in the full year 2011. That said, in spite of the Central Bank's interventions, on 30 April, international reserves reached USD 57.5 billion, well above the USD 49.0 billion recorded at the end of December 2011.
Author: Ricardo Aceves, Senior Economist