Increased mining supply pushing Peruvian currency higher -cenbank

LIMA (Reuters) – A greater supply of dollars from the mining sector in Peru – the world’s No. 2 producer – is pushing up the local sol currency, which has risen around 7% this year, the central bank said on Friday.

So far this year, the sol is South America’s second best performing currency behind Brazil’s real, according to Refinitiv Eikon data. It has also outperformed Chile’s peso, whose economy is similarly dependent on mining as the world’s top copper producer.

High metal prices should allow Peru to collect over 6 billion soles ($1.62 billion) in tax revenue this year, said Adrian Armas, the Central Bank manager of economic studies.

“With the record prices of commodities, collection is improved, therefore (also) the supply of dollars from mining,” Armas said during a conference call.

Peru’s sol currency rose 0.22% on Friday to 3,704/3,705 units per dollar, rising 7.17% since the beginning of the year.

On Thursday, the central bank raised its interest rate to 4% from 3.5% amid the inflationary pressures that have been affecting economies around the world.

Armas added that global uncertainty due to the conflict between Russia and Ukraine, and a likely interest rate increase in the United States could weaken the Peruvian currency in the future.

The Central Bank officer added that the Peruvian economy should have grown in January at a year-on-year rate equal to that of December, when it rose 1.72%. A recovery is expected for February, he added.

($1=3.7040 soles)

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.