Bloomberg News

Peru Buys Most Dollars Since July 2010 to Temper Sol Gains

December 01, 2011

Dec. 1 (Bloomberg) -- Peru’s central bank bought the most dollars since July 2010 to slow gains in the sol as the local currency rose to its strongest level in three years.

The central bank bought $326 million, its biggest daily purchase since buying a record $494 million on July 14, 2010.

The sol rose 0.1 percent to 2.6990 at today’s close, from 2.7005 yesterday, according to Deutsche Bank AG’s local unit. It earlier rose to 2.6970, its strongest level since April 2008.

Dollar sales increased in the local market as investors let forward contracts expire after central banks acted to lower the cost of dollar funding in an effort to ease Europe’s debt crisis.

Investors won’t wind up their dollar holdings entirely “as long as the crisis remains latent and until there are clearer signs of a stronger sol,” said Gonzalo Navarro, head trader at Banco Santander in Lima.

The yield on the nation’s benchmark 7.84 percent sol- denominated bond due August 2020 fell two basis points, or 0.02 percentage point, to 5.67 percent, according to prices compiled by Bloomberg.

--Editors: Glenn Kalinoski, Brendan Walsh

To contact the reporter on this story: John Quigley in Lima at

To contact the editor responsible for this story: David Papadopoulos at

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