Increased mining supply pushing Peruvian currency higher -cenbank

Increased mining supply pushing Peruvian currency higher -cenbank

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Economy4 hours ago (Mar 11, 2022 04:50PM ET)


Increased mining supply pushing Peruvian currency higher -cenbank© Reuters. People gather as community leaders rejected a government proposal to prevent future blockades affecting the Las Bambas copper mine, in Sayhua, Peru January 17, 2022. REUTERS/Sebastian Castaneda


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)

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