The exchange rate would close 2022 between S/ 3.75 and S/ 3.80 per dollar. This is if the value of copper stabilizes at around US$4.00 per pound, estimates Carlos Prieto, manager of the Economic Studies Area of the Banco de Credito del Peru (BCP).
“If the price of copper falls more, the exchange rate can be located above this range and if the exchange rate depreciates more, it makes it more difficult for the Central Bank to act because it leads to risks of higher inflation,” he commented during the meeting. presentation of the BCP Quarterly Macroeconomic Report.
In that sense, Prieto explained that the cut in the growth projections of Peru’s main trading partners such as China and the United States has directly affected the price of the red metal, which fell from levels above US$ 4.70 per pound. in March to below US$3.70 in June.
“This implies a more depreciable exchange rate, if the price of copper falls we will have fewer exports, there will be less supply of dollars and the exchange rate will depreciate,” he explained.
In addition, he specified that due to the fall of the metal, in recent days the value of the greenback has been around S/ 3.80, in contrast to other sessions that closed at levels below S/ 3.70.
“A more depreciated exchange rate translates into higher inflation and higher inflation puts additional pressure so that the BCRP has to raise its reference rate even more,” he commented.
Peruvian economy would slow down to 1.6% in the second half
According to Carlos Prieto, the Peruvian economy would slow down and grow only 1.6% in the second half of this year. The result would be driven by the rise in global inflation, the drop in the price of copper, as well as the variation in the exchange rate and the exhaustion of the post-Covid-19 rebound.
Regarding local inflation, which currently exceeds 8%, the economist expects it to close the year at around 6.5%, “but the risks are on the upside.” In addition, he highlighted that the slowdown in the consumer price index would be seen after August 2023, closing the year at 3.5%, that is, outside the target range.