Peru’s Sol Expected to Weaken Further in 2014

Peru’s sol currency is expected to continue to depreciate this year,  to a range of around 2.85 per US dollar, according to a recent poll by the Central Bank.

The Central Bank’s monthly survey among economic analysts, companies in the financial system and companies in the non-financial system found outlooks ranging between 2.83 and 2.87. The Central Bank’s report is available here.

Companies in the financial sector that were polled by the Central Bank said they expect the exchange rate to depreciate slightly to 2.83 soles per dollar by the end of 2014. Non-financial companies in the poll saw a weaker sol at 2.85 per greenback. Meanwhile, economic analysts said they expect the Peruvian currency to weaken to 2.87 per dollar at the end of 2014, and then reach 2.9 per dollar by the end of 2015.

The sol depreciated in 2013 by more than 9 percent against the dollar, following several years of appreciations. The weakening of the sol last year was largely due to the US Federal Reserve’s announcement that it would start easing off its $85 billion a month bond buying program.

In prior years, the sol had appreciated against the dollar. At the start of 2013, the exchange rate was near 2.5 per dollar.

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