BCRP: dollar closes at S/3.6260 and completes 5 months of decline

The dollar closed in June at S/3.6260, its lowest level in more than two years. The last time it scored a similar value was on April 15, 2021, when it reached S/3.6280, according to the Central Reserve Bank of Peru (BCRP).

In this way, the us currency it completed five consecutive months of decline and accumulated a 4.75% decline compared to the S/3.7080 registered in the last session of 2022.

The reduction in the exchange rate responds to both external and internal factors.

Thus, Javier Pineda, general manager of Billexexplains that the main cause of this trend has been the decision of the US Federal Reserve (Fed) not to increase its reference rates in June.

Inflation in Lima for May reached 7.89%, the lowest in 14 months. Photo: Andean

For his part, Omar Azañedo, CEO of Noncash, complements that the downward revision of global economic indicators in the first quarter of 2023 has also had an influence, as well as a perception of weakening of the North American economy due to the persistence of in inflation. “This has made currencies in general begin to appreciate,” says Azañedo.

On the other hand, in what corresponds to local factors, Pineda points out that the increase in exports and the positive trade balance of Peru during the year have had a significant impact on the exchange rate. In other words, the increase in foreign sales has generated a greater income of dollars in the Peruvian economy, which contributes to the strengthening of the sol.

Both specialists agree that the fact that the BCRP keep up high interest rate of reference that is currently at 7.75%.

de-escalation Inflation as of May stood at 7.9%. The BCRP expects to reach the target range in 2024 after closing 2023 at 3.3%. Photo: diffusion

Expectations at the end of the year

Regarding the prospects for the second half of the year, Pineda points out that the trend of the exchange rate will depend mainly on the Fed’s policy. If this entity continues without increasing its interest rates, it is likely that the exchange rate will remain at current levels.

However, the Billex manager adds that the imminent arrival of El Niño in the coming months could put upward pressure on the price of dollar.

Data

Expectations. Economic agents anticipate for the end of 2023 an exchange rate of between S/3.70 and S/3.80according to the BCRP.

In 2024. For the next year, the forecast It is between S/3.75 and S/3.80.

Evolution of the exchange rate in recent years