Bloomberg News

Peru’s Sol Advances to Three-Year High as Slowdown Concerns Ease

January 09, 2012

Jan. 9 (Bloomberg) -- Peru’s sol rose to highest in more than three years as optimism the Andean country will withstand the global slowdown boosted demand for its currency.

The sol was little changed at 2.6930 per U.S. dollar at today’s close, from 2.6940 on Jan. 6, according to Deutsche Bank AG’s local unit. The currency earlier gained to 2.6910, its strongest since April 2008.

Concern that Europe’s debt crisis and sluggish U.S. growth will slow Peru’s commodity-dependent economy led local banks to boost their dollar holdings towards the end of last year. Banks are reducing those holdings as the risk of a global recession diminishes and the Andean nation’s growth outlook remains intact, said Pedro Tuesta, a Washington-based economist at 4Cast Inc.

“Peru’s economy is still going very strong and will probably have the highest growth in the region this year, despite slower private investment,” Tuesta said.

Peru, the world’s third-largest copper and zinc producer, will probably grow 5.5 percent this year, after while exports rise to $48 billion from $43 billion in 2011, Cabinet Chief Oscar Valdes said Jan. 5. Gross domestic product rose 5.1 percent in October.

The central bank bought dollars for a second day to temper gains in the currency. The bank purchased $2 million and paid an average 2.6920 soles per dollar, it said on its website.

The yield on the nation’s benchmark 7.84 percent sol- denominated bond due August 2020 climbed two basis points, or 0.02 percentage point, to 5.71 percent, according to prices compiled by Bloomberg. The security’s price fell 0.13 centimo to 114.25 centimos per sol.

--Editor: Marie-France Han

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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