Solid Ground For Sol

The sol has experienced strong upward pressure due to the global weakness of the US dollar, despite central bank dollar purchases of the currency to the tune of a record US$2bn in 2004. It recently hit PEN3.2665/US$, its highest level since January 1999. The favourable economic outlook and rising foreign exchange reserves have combined to shore up confidence in the unit. Near term though, a possible rebound in the dollar, together with central bank efforts to curb the sol's appreciation, could well give rise to a period of consolidation, and possibly even correction. That said, we expect strong support for

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