Dec. 7 (Bloomberg) -- Peru’s sol rose to its strongest level in more than three years as speculation European policy makers will agree on steps to contain the region’s debt crisis spurred demand for higher yielding assets.
The sol rose 0.1 percent to 2.6955 per U.S. dollar at today’s close, from 2.6975 yesterday, according to Deutsche Bank AG’s local unit. The currency earlier touched 2.6950, its strongest level since April 2008.
Overseas investors allowed forward contracts to expire as aversion to risk eased, said Fernando Garcia, a forward currency trader at Banco Internacional del Peru in Lima.
“There’s no longer a strong demand for dollars from offshore investors,” which led Peruvian banks to sell the currency locally, Garcia said.
Peru’s central bank bought $123 million in the spot market today to slow gains in the sol. It paid an average 2.6960 soles per dollar, according to its website.
The central bank sold dollars in the spot market in September to prop up the sol after Europe’s debt woes and weaker U.S. economic growth prompted investors to seek less risky investments.
The European Central Bank may announce a range of measures tomorrow to stimulate bank lending, including a cut in the benchmark interest rate, said three euro-area officials with knowledge of policy makers’ deliberations.
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 5.69 percent, according to prices compiled by Bloomberg. The bond’s price rose 0.13 centimo to 114.55 centimos per sol.
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