The exchange rate is over S/ 3.80 in Peru, how has it fared in the region? | economy

The exchange rate closed Wednesday’s trade at S/ 3,813. While this is down slightly from Tuesday’s close of S/ 3.823, it is still above S/ 3.80, according to data from the Central Reserve Bank (BCR).

Meanwhile, globally, the dollar gained 3.4% against the DXY index, which compares the dollar’s value against the euro, yen and a basket of emerging market shares. World, explained Alberto Arispe, manager of Calpa SAB.

According to Arispe, so far this year, the dollar has risen 0.4% against the Peruvian sol, and today we are trading at the same level as the end of 2022.

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So far this year, the dollar has risen 7.8% against the Chilean peso against the region’s major currencies; 2.2% against the Brazilian real; 7% against the Mexican peso, but lost 13% of its value against the Colombian peso.

“It’s mixed in Latin America, but globally, the dollar has risen against currencies in general”he added.

Teodoro Crisolucian, a senior analyst at the Peruvian Institute of Economics, noted that what is happening in the country with the exchange rate is a widespread phenomenon in almost all emerging currencies; However, against a backdrop of high interest rates globally, the most undervalued currency in the region is the Chilean peso.

The Chilean currency accumulated a nearly 5% depreciation between August and September, according to Crisolucion, more than the average recorded by other Latin American currencies.

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“In Chile [la moneda] “It has been hit by higher global prices and the effects of international prices for minerals it exports, such as copper.”Chrysologus said.

Also, according to Arispe, copper prices have fallen 5% so far this year, which is why the Peruvian and Chilean economies have seen increases in their exchange rates. Not so in major oil exporter Colombia, as its price has risen 15% this year, helping it become the only currency that has not lost value against the dollar.

For Brazil and Mexico, the issue of global interest rates weighs heavily, Crisolucian added. He noted that the Chilean currency depreciated by 4.8% in September alone; As the US expects higher interest rates in the long term, the Mexican one is 4%; The Brazilian and Peruvian pesos showed a 3% and 2.9% depreciation, respectively, and finally, the Colombian peso strengthened by 0.8%.

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César Romero, head of research at Renta4 SAB, said Colombia maintains a higher current rate with 13.5% than countries such as Brazil, which stood at 13.75% but cut by 100 basis points in two meetings.

“A higher rate indicates that there will be less movement of the currency (…) This is one of the reasons why it has remained stable in recent days after all [las otras monedas de Latinoamérica] They are starting to wear out. Throughout the year, it outperforms its peers.”I notice.

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Money politics

This October 5, the BCR board will assess its monetary policy and according to Romero, the market average expects a 25 basis points cut in interest rates from 7.5% to 7.25%.

For his part, Chrysolucian admits that markets expect a rate cut, but they are waiting to see how much it will be and they estimate the BCR will be conservative.

“Beyond the conclusion, given the significant moderation in inflation in recent months, the BCR has plenty of room to assess cuts throughout the year”He said.