An Unsettled Sol

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The Peruvian sol sold off sharply in early September, hitting an eleven-month low of PEN3.332/US$, on heavy dollar buying by banks, even though the Central Reserve Bank of Peru (BCRP) had absented itself from the market for just the third time in the year to date. Since, the unit has struggled to return to the key level of PEN3.250/US$, at which it has been held by the central bank for most of the year, and, indeed has been trading weaker. We do not rule out further losses in the near term to PEN3.350/US$. July's rate of GDP growth disappointed, and