Peru: Sol strengthens to a 15-year high
February 29, 2012
On 16 March, the Peruvian sol (PEN) traded at 2.67 per USD, which was 0.4% stronger than in the same day the previous month and marked, in fact the strongest level in 15 years. In annual terms, the PEN has gained 3.5% compared to the same month last year. The appreciation of the Peruvian sol was buttressed by higher purchases of local currency by businesses, as firms have to pay local income taxes. Moreover, private sector analysts expect businesses will continue to bring forward their currency purchases in March and April, as the deadline to pay local income taxes ends up in April. Consequently, the Central Bank has intervened in the foreign exchange market to stem gains in the sol. The Bank has purchased USD 4.9 billion so far this year, including USD 161 million on 16 March, which has already surpassed the USD 3.5 billion monetary authorities purchased in the full year 2011.
Author: Ricardo Aceves, Senior Economist