Andina

Central Bank sees confidence in rapid recovery of Peruvian economy

18:14 | Lima, Jul. 10.

BCR's Economic Studies Central Manager Adrian Armas on Friday affirmed that interest rates on Peru's sovereign bonds are at historically low levels, which shows confidence in the recovery of the Peruvian economy.

"The impact was strong, but it is expected to be temporary," he said in an online press conference.

Investors head back to bonds

In addition, Armas highlighted the share of non-resident investors in holdings of Peruvian sovereign bonds, which increased from 48% to 50% between December 2019 and June 2020.

"This overcame the temporary reduction in holdings of sovereign bonds by non-residents due to greater risk aversion in March," he said.

Peruvian Sol one of the strongest currencies

Likewise, the official reported that the Central Reserve Bank of Peru (BCR) intervened in the market to reduce exchange rate volatility, thus reflecting the strength of the local currency.

"The Peruvian Sol registers the lowest depreciation of all currencies in the region, at only 6.3%, less than that registered in neighboring countries," he noted.

The economist highlighted that the injection of liquidity from central banks has contributed to lowering interest rates globally, including in Peru.

Worst of crisis is over

Finally, Armas explained that financial tensions caused by the pandemic were felt mainly in March. Afterwards, markets have calmed down.

"Non-payment insurance, five-year credit default swap (CDS), and country risk ratings rose at the time due to the crisis, but fell then," he added.

(END) JJN/RMB/MVB

Published: 7/10/2020
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