Is Peru a country with large international reserves? | International Reserves | RIN | BCRP | Monetary Policy | economy

Peru is generally the fifth or sixth largest country in the Latin American region, depending on the economic composition assessed. Gross Domestic Product (GDP) oh ExportsName two of these.

But another one of those indicators Net International Reserves (RIN)A must especially for economic analysts and local and foreign institutional investors.

Peru's international reserves stood at US$75.4 billion as of March 7 Central Reserve Bank of Peru (BCRP)This accounts for the US$ 4.4 billion increase that RINs have exhibited so far this year.

read more: BCR increases reserve investment in foreign government bonds

Is Peru the country with the largest international presence in the region?

This amount is 26.8% of Peru's GDP, making it the Latin American country with the largest international reserves among the largest economies in the region, according to the BCRP.

For comparison purposes, the issuing agency described that in 2023, Peru's reserve assets reached 26.6% of GDP. Brazil (16.7%) and Colombia (16.4%), and the laggards are Chile (13.7%) and Argentina with only 3.1%.

In this way, our country has a significant advantage over other countries, and even two years ago, its reserves were 29.3% of GDP.

read more: Julio Velarte and his GDP growth forecast for 2024

What advantage does Peru have in having more international reserves?

“Peru's international presence is very high”He pointed out Julio Velarde, head of the BCRP, notes that such a position makes it easier for the currency authority to credibly intervene in the market. In particular, he mentioned the exchange market where the central bank intervenes to moderate sudden fluctuations in currency prices. dollar.

If pressure on the dollar is high and speculative factors are present, BCR intervenes through direct sales of the US currency and derivative instruments (such as exchange swaps). In contrast, when downward pressures on the dollar exceed economic fundamentals, the monetary regulator buys the greenback to balance the market and avoid speculative positions by market participants such as foreign investors.

This type of intervention is what economists describe as a “dirty” exchange rate float regime, but it is nothing more than central banks acting to moderate currency volatility in order to avoid collateral effects on other indicators. The inflammation.

Thanks to this project, BCRP has highlighted that it is the country with the least volatile currencies in the world.

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