Bloomberg News

Peru Sol Falls to One-Week Low as Copper Drops on Europe Concern

October 04, 2011

Oct. 4 (Bloomberg) -- Peru’s sol fell to a one-week low as copper prices dropped on concern Europe’s sovereign debt crisis will slow the world economy and reduce demand for the metal.

The sol weakened 0.1 percent to 2.7775 per U.S. dollar at 1:31 p.m. New York time, from 2.7745 yesterday.

Copper extended the longest slump in almost two months after Goldman Sachs Group Inc. cut its global growth forecast for this year and next and predicted mild recessions in Germany and France. European governments signaled bondholders may have to take bigger losses on Greek debt than previously negotiated. Federal Reserve Chairman Ben S. Bernanke said the central bank stands ready to take additional steps to boost U.S. growth.

“Chile is more sensitive to the copper price as Peru’s metal output is more diversified, but both countries are very dependent on metal prices,” said Gonzalo Navarro, the head trader at Banco Santander in Lima.

Peru is the world’s third-largest copper producer after Chile and China, number two in silver and sixth in gold. Metals account for two-thirds of Peru’s exports.

The yield on Peru’s benchmark 7.84 percent sol-denominated bond due August 2020 rose two basis points, or 0.02 percentage point, to 5.95 percent, according to prices compiled by Bloomberg.

--Editors: Richard Richtmyer, Brendan Walsh

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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