Bloomberg News

Peru’s Sol Gains on Central Bank Sale, European Debt Optimism

September 29, 2011

Sept. 29 (Bloomberg) -- Peru’s sol advanced for the second day this week after the central bank sold dollars and as local investors speculated European policy makers will tame the euro zone’s sovereign-debt crisis.

The sol gained 0.1 percent to 2.7685 per U.S. dollar at 11:54 a.m. New York time, from 2.7715 yesterday.

The Andean country’s central bank has sold $434 million in the spot market in the past week, including $27 million yesterday, after concern Europe’s debt troubles may worsen pushed the sol to a three-month low on Sept. 22. The euro strengthened and Greek bonds surged today after German lawmakers backed the expansion of a European bailout fund.

Increased demand for soles locally is offsetting reduced demand from investors overseas, said Gonzalo Navarro, the head trader at Banco Santander in Lima.

“The fact that we have a central bank selling dollars, positive stock markets and a strengthening euro is spurring demand for soles,” Navarro said. “There’s a bit more confidence the market can bounce back.”

The yield on the nation’s benchmark 7.84 percent sol- denominated bond due August 2020 rose one basis point, or 0.01 percentage point, to 5.86 percent, according to prices compiled by Bloomberg.

--Editors: Brendan Walsh, Glenn J. Kalinoski

To contact the reporter on this story: John Quigley in Lima at jquigley8@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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