Bloomberg News

Peru’s Sol Weakens as Central Bank Purchases Counter Tax Flows

October 11, 2012

Peru’s sol weakened for the first time this month after the central bank stepped up dollar purchases to offset sales by companies looking for local currency to meet a tax deadline.

The sol fell 0.1 percent to 2.5870 per U.S. dollar at the close of trading, according to Deutsche Bank AG’s local unit. The central bank said it bought $80 million in the spot market today and paid an average 2.5870 per dollar, after buying $80 million yesterday.

Policy makers have increased daily purchases from $20 million last week as dollar sales increase before a monthly period for tax payments begins Oct. 12.

“The central bank will keep intervening as it seeks to contain the volatility the market may experience during this period,” said Hedmond Rios, an economist at Celfin Capital in Santiago.

The yield on Peru’s benchmark 6.55 percent dollar- denominated bond due March 2037 fell two basis points, or 0.02 percentage point, to 3.57 percent, according to Bloomberg prices. The bond’s price rose 0.32 cent to 148.25 cents per dollar.

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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