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Peru combats the inflow of capital raising banks’ reserve requirements

Friday, August 27th 2010 - 08:02 UTC
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El Sol appreciated to its August 2008 record level El Sol appreciated to its August 2008 record level

Peru’s central bank will raise the reserve requirement for foreign banks depositing local currency in the domestic banking system after the Sol rose to a two- year high.

The bank will raise the marginal reserve mandate to 120% of foreign banks’ domestic deposits, from the current 65%, beginning Sept. 1, it said in an e-mailed statement today.

The measure seeks to deter “short-term speculative funds” from entering the Peruvian financial system and destabilizing the currency, the bank said.

Peru’s Sol rose 0.1% to 2.7955 per dollar Thursday from 2.7975 Wednesday. That’s the currency’s strongest level since August 2008. The Sol has appreciated 3.3% this year.

With a strong economy based on mining, energy and fisheries, and a managed budget, Peru has become a renowned attraction for foreign investors.
 

Categories: Economy, Latin America.
Tags: Peru.

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