Peru’s sol currency continued to depreciate after the Christmas holidays, trading at its weakest rate against the US dollar in more than five years, daily Gestion reported.
The sol approached 3.0 per US dollar, and closed Monday’s trading session at 2.99, thanks to an intervention from the Central Reserve Bank. The sol had closed its previous session at 2.979.
The Central Bank regularly intervenes in the spot market to sell US dollars, which helps to ease the depreciation of the sol. The Bank says it intervenes in order to minimize sharp swings in the exchange rate, which could have a negative impact on individuals and companies that ae paying debts in US dollars but have earnings in the sol.
On Monday, the Central Bank sold $120 million at an average exchange rate of 2.9892.
The sol has depreciated so far this year by 6.79% against the US dollar.
The sol has been appreciating for several years against the dollar, reaching a level of almost 2.50 per dollar only about a year and a half ago.
That trend was reversed due to a slowdown in China’s economy, which hurt Peru’s economic activity, and a decision by the US Federal Reserve to start tapering its multibillion-dollar-a-month bond buying program.