Peruvian Bourse, Currency Dragged Down in Global Sell Off

Peru’s stock market and currency were battered on Monday, following sharp declines in global stock markets and emerging market currencies.

Stock markets in the U.S., Europe, Asia and Latin America were rocked by concerns about the health of China’s economy, which has slowed sharply leading the government to devaluate its currency earlier this month.

On Monday, China’s Shanghai Composite fell 8.5%, while the Dow Jones Industrial Average in New York dived over 1,000 points, its largest one-day fall ever, according to The Wall Street Journal.

The Lima Stock Exchange in Peru is heavily dependent on international bourses. The mining-heavy exchange also closely tracks commodity prices like copper and gold.

The Peruvian bourse’s general index closed Monday down 4.4%, as blue-chip stocks in the mining index were hard hit. The mining index fell 5.8% Monday, while the consumer index was also down 5.8% and the financial index decreased 3.68%.

Meanwhile, Peru’s sol currency also lost ground compared to the US dollar, depreciating to 3.28 per dollar versus 3.27 in the previous session. The sol has been depreciating despite interventions by the Central Bank, BCRP, to sell US dollars in an effort to reduce exchange rate volatility.

On Monday, the Central Bank sold another $50 million on the spot market. The BCRP says it intervenes in order to limit large swings in the exchange rate, rather than influence the direction of the currency depreciation or appreciation, since a large portion of the Peruvian financial system operates in US dollars. Many Peruvians have loans in US dollars, despite earnings in the sol currency.

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