© Reuters. A teller carries bills for Sol from Peru on a street in downtown Lima, Peru on December 15, 2017. REUTERS/Mariana Pazo
Written by Marco Aquino
LIMA (Reuters) – In a country shaken by years of political volatility, Peru’s national currency has emerged as a mainstay of relative stability among Latin American foreign exchange markets, reaching its strongest level in a year this week.
After suffering a blow during the nearly two-year presidency of Pedro Castillo, Peruvian Sol has bounced back just months after his sacking and subsequent protests briefly stifled the economy of the world’s second-largest producer.
Data from the central bank and traders showed that, for the third consecutive day on Thursday, the index achieved its best performance since May 2022, as it traded at 3.665 sol per dollar.
Major Latin American currencies have strengthened sharply in recent months, such as the Mexican peso, which hit a five-year high this week.
However, Peru’s currency has not deviated much in value since 2000 and is up about 3% so far in 2023 from its closing price at the end of December.
“Since the beginning of the century, we have devalued close to 6% (…) while other currencies have depreciated by 50%, 100% or 150%,” Peruvian Central Bank President Julio Velarde said Wednesday at a launch event. commemorative coin.
In this context, Velardi said, “The sol currency is one of the most stable currencies in the region among large and medium-sized countries.”
Of the 10 presidents of Peru this century, most respected free market policies with strict fiscal discipline. This has allowed the economy to enjoy record growth rates for years, accumulate large net reserves, and own a currency market that moves freely with supply and demand.
In this context, the Central Bank of Peru has only intervened in the market by buying or selling dollars or financial instruments to mitigate Sol’s fluctuations.
“What has emerged in 20 or 30 years is that the sol is a currency that guarantees redemption, and that is why Peru has more or less 40% of its debt in the subsoil,” Economy Minister Alex Contreras said at a recent event.