Peru’s sol dropped to its lowest level in three months as local banks purchased U.S. currency to meet increased reserve requirements.
The sol depreciated almost 0.1 percent to 2.5973 per dollar at the close in Lima, its weakest level since Nov. 20, according to data compiled by Bloomberg.
Peru’s central bank told lenders to set aside more dollars in reserve for a third time this year on Feb. 27 to help weaken the sol, which touched a 16-year high on Jan. 14. The sol has fallen 1.8 percent this year as U.S. currency purchases by the monetary authority and local pension funds’ increasing investments abroad tightened the supply of greenbacks.
“The domestic dollar liquidity situation appears to be extremely tight,” Clyde Wardle, a currency strategist at HSBC Holdings Plc, said in a phone interview from New York. The sol may “snap back relatively quickly” to about 2.58 if dollar liquidity recovers.
The one-month implied yield on sol forwards fell to -5.68 percent today, the lowest level on a closing basis since March 2008, indicating demand for greenbacks.
The yield on the sol-denominated bond due in August 2017 climbed three basis points, or 0.03 percentage point, to 2.40 percent, according to data compiled by Bloomberg. The price fell 0.14 centimo to 125.84 centimos per sol.
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