Yields on Peru’s benchmark bonds due in 2020 fell as investors bought the securities on a bet the currency will appreciate as companies sell dollars to make tax payments.
Peru’s sol depreciated for the first time in four days after the central bank bought dollars to stem gains in the local currency.
Peru’s sol closed at its weakest level in three months after dollar purchases by the central bank and pension funds diminished local supply of the greenback.
Peruvian consumer prices rose less than economists expected last month, fueling speculation the central bank will keep borrowing costs on hold.
Peruvian monthly inflation slowed in August after increasing at the fastest pace in three years the previous month, as the lower cost of imported grains offset higher electricity prices.
Peruvian inflation accelerated for the first time in three months in February as food prices rose after flooding damaged crops and blocked roads.
Peruvian consumer prices fell for the first time in 10 months in August as food prices continued to ease.
Peru’s sol fell to a one-week low as German business confidence sank and the central bank increased the price it paid for dollars in the spot market.
Peru’s central bank kept borrowing costs unchanged yesterday for a 12th month and signaled its readiness to respond to any shifting inflation expectations after boosting reserve requirements to tame credit growth.
"The authorities have unified the message that both monetary policy and fiscal policy will have a more expansive bias in the coming months."
- Mario Guerrero on Jun 12, 2014