Bloomberg News

Peru’s Sol Rises on Dollar Purchase Halt, China Spending Pledge

March 05, 2013

Peru’s sol rose for the first time in four days after the central bank halted dollar purchases and as China’s pledge to increase government spending spurred demand for emerging-market assets.

The sol gained 0.1 percent to 2.5935 per U.S. dollar at 11:45 a.m. in Lima, according to prices compiled by Bloomberg. The currency has dropped 1.6 percent this year after gaining 5.7 percent in 2012.

The central bank hasn’t bought dollars in the foreign exchange market for a week, its longest abstention since August, after purchasing $3.4 billion in the first two months of the year to weaken the sol. Emerging-market stocks and currencies rallied today after China’s Finance Ministry said it will boost spending by 10 percent this year as Premier Wen Jiabao set an economic growth target of 7.5 percent, unchanged from 2012.

“International markets are more optimistic today,” said Juan Carlos Odar, a senior analyst at Banco de Credito del Peru in Lima. “The central bank has decided to wait and consider what its next move will be.”

The sol has had its worst start to a year since 2009 after the central bank raised lenders’ dollar reserve requirements three times to counter increased capital inflows.

The yield on the nation’s 7.125 percent dollar bond due March 2019 fell two basis points, or 0.02 percentage point, to 2.08 percent, according to prices compiled by Bloomberg. The price rose 0.12 cent to 128.62 cents on the 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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