2023 was an atypical year for Peruvian economy after recession, as well as the impacts of Cyclone Yaku and El Niño Phenomenon, among other negative factors. Despite this difficult context, the Peruvian Sol has continued to display enviable resilience.
"Our (Peruvian) Sol continues to show a certain strength. It is one of the strongest currencies, not only in the region, but also around the world," Noncash startup founder and Peruvian Chamber of Franchises Chairman Omar Azañedo told Andina news agency.
It should be noted that, to date, the U.S. Dollar's value stands at S/3.75 in the interbank market. Thus, it has registered an accumulated increase of close to 1% so far this year.
According to data from the
Central Reserve Bank (BCR),
the currencies of Argentina, Brazil, and Chile have to date experienced decrease of 10.0%, 6.1%, and 3.0%, respectively.
"When we look at the Colombian currency, the Mexican Peso, the Chilean Peso, or the Brazilian Real, we see that our depreciation or loss of value against the U.S. Dollar is not as much as in those countries," he added.
Factors
The expert affirmed that the Sol's strength is due to Peru's good macroeconomic situation and the monetary policy guided by the BCR.
"We have been one of the countries that have practically been announcing reductions in interest rates, despite the fact that even the most developed economies still keep them high," he indicated.
Projections
The Noncash founder projected that the U.S. Dollar value will be around S/3.80 for the second half of 2024.
It could also close the year above said threshold in the event that global economic growth indicators become revised downwards.
"The growth expectations for different economies worldwide are downward; it is projected that the United States will not grow at high rate, neither will China, nor will Europe, less so. You also have the scenario of war in Europe, logistics chains that are affected on a global scale, and the war in the Middle East is still latent," he explained.
At the local level, a not so high gross domestic product (GDP) growth and persistent inflation could pressure the green bills upwards due to the "safe haven effect."
"We have already reached our inflation target range; however, prices have not fallen back to initial levels or to levels prior to the COVID-19 crisis; they are still high for both products and services," Azañedo affirmed.
"With all this scenario, it is unlikely that we will see the U.S. Dollar at levels registered in 2019 (S/3.315 on December 31) or that it will decline further. It is much more likely that we will continue to see a high and rising U.S. Dollar," he concluded.