PEN: Interventions To Stem Further Appreciation

Having broken through multi-month trendline resistance at PEN2.8400/US$ to trade at PEN2.8280/US$ on June 24, the short-term technical outlook for the Peruvian sol is certainly bullish. With global commodity prices (but particularly copper and gold), continuing to trend higher for the time being, appreciatory pressures on the currency are pronounced. While ongoing interventions by the Banco Central de Reserva del Perú (BCRP) have hitherto limited the unit's gains against the dollar, we nevertheless believe that further upside for the sol is in store in the near term, and target appreciation towards PEN2.8100/US$ in the first instance.

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