Peru: Sol strengthens further in January
January 31, 2012
On 31 January, the Peruvian sol (PEN) traded at 2.69 per USD, which was 0.3% stronger than the previous month and marked, in fact, the strongest level seen in over a decade. In annual terms, the sol has gained 2.9% compared to the same month last year. The appreciation of the Peruvian sol in January, which follows a similar pattern observed in other emerging market currencies, was mainly boosted by increasing investor appetite for risk due to prospects of a prolonged agreement between Greece and its private creditors. Consequently, the Central Bank intervened in the foreign exchange market on 1 February and purchased USD 293 million at an average rate of PEN 2.69 per USD. The Bank's move represents its biggest foreign currency acquisition so far this year. Monetary authorities have been intervening in the foreign exchange market since 6 January, with purchases already totalling USD 1.6 billion.
Author: Ricardo Aceves, Senior Economist