Bloomberg News

Peru Sol Heads for Biggest 2-Day Rise in Four Months on ECB Move

October 06, 2011

Oct. 6 (Bloomberg) -- Peru’s sol headed for its biggest two-day gain in four months as moves by the European Central Bank to shore up the euro region’s money market spurred demand for higher-yielding, emerging-market assets.

The sol strengthened 0.5 percent to 2.7485 per U.S. dollar at 12:31 p.m. New York time, from 2.7630 yesterday. The currency rose 0.5 percent yesterday.

The ECB will start buying covered bonds and offer banks two additional unlimited loans, ECB President Jean-Claude Trichet said today after policy makers left the benchmark interest rate at 1.5 percent.

“Overseas investors are buying soles again as international markets are calmer,” said Mario Guerrero, an economist at Scotiabank Peru in Lima. Peruvian banks may seek to reduce their “heavy” dollar holdings as the sol strengthens, Guerrero said.

Peru’s central bank will probably leave its benchmark rate at 4.25 percent for a fifth month today, according to 17 of 18 analysts in a Bloomberg survey. The bank will announce its decision at about 7 p.m. New York time.

--Editors: Marie-France Han, 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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