Many times it has been said that the sun is a currency that remains strong. At the end of September, according to information from Bloomberg, the peruvian currencyuntil that moment, maintained an advantage of 0.7% compared to the dollar, while the Argentine peso depreciated by 30.2%, the Chilean by 11.7% and the Colombian by 9.9%.
Why the sun stays strong despite political uncertainty One of the reasons is because of the exchange rate policy that the Central Reserve Bank called “dirty float”, meaning that the BCR intervenes only when there is a lot of volatility.
The director of the issuing entity and former head of the MEF, Carlos Oliva, explained to Peru21 that this institution does not have a goal of how much the greenback should be priced at, much less establishes a fixed exchange rate.
“When it is very volatile, when it rises suddenly, or drops suddenly or significantly, to avoid this, the BCR intervenes by buying or selling dollars, depending on where the pressure is going. That’s called a dirty float,” he explained.
Last year, after Pedro Castillo assumed the Presidency of the Republic, the Central Reserve Bank had a lot of activity, almost daily, intervening in the market through sales of dollars due to the political uncertainty that led to the rate exchange will even pass the S/4 barrier.
In this way, only from July 28 to December 31, 2021, the entity sold US$6,366 million. This situation allowed the greenback not to shoot up even more.
The president of the issuing entity, Julio Velarde, stated in September 2021, when the US currency was above S/4.10, that the price could be up to S/3.70 without political uncertainty from the government. The current Minister of Economy and Finance and then an analyst, Kurt Burneo, called for even more intervention.
In this regard, Oliva stressed that “the BCR intervenes so that there is not a very large jump in a single day, but it does not have an exchange rate goal.”
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INFLATION
When the dollar rises, the goods traded in this currency tend to increase; therefore, there could be pressure on prices.
“A stable exchange rate facilitates stable inflation,” Oliva commented. However, today that does not happen, according to the economist, due to factors such as the war between Russia and Ukraine and high international prices, among other elements.
And although today we have inflation that in August reached an interannual percentage of 8.4%, in Chile it reached 14.1% and in Colombia 10.8%, according to data from the Central Bank.
The issuing entity, to prevent the Consumer Price Index from skyrocketing, has been raising its reference interest rate since 2021, which today is 7%.
For Oliva, without these measures we would reach the levels of the countries indicated above. In addition, he clarified that this increase does not affect the arrival of private investment, as it does the credibility of the government. Clearer, neither the water.
DATA
-So far in 2022, the BCR has sold US$1,226 million.
-Last Friday the dollar closed the day at S/3,959. With this value, it accumulates a drop of 3.30% compared to the sun so far this year, and a decline of 0.80% in the last 12 months.
