Dollar is heading towards S/3.90 by the end of the year

The dollar closed the day on Wednesday higher, for the seventh consecutive day, and was quoted at S/3.8130, a value it had not approached for almost seven months (see infographic). This result meant an advance of 0.71% compared to Tuesday’s close when it reached S/3.7860, according to the Central Reserve Bank of Peru (BCRP). So far this year, the currency has accumulated a variation of -0.55%.

In the parallel market it was quoted at S/3.78 for the purchase and S/3.82 for the sale. While in the banking market the purchase was at S/3.7110 and the sale at S/3.9120 in the Banco de Crédito del Perú (BCP).

According to Asvim Asencios, a trader at Divisas de Renta4 SAB, during the day there was demand from the offshore market, taking the dollar to a maximum price of S/3.8130. US$387 million were traded in the market at an average price of S/3.7988.

The BCRP intervened by placing an exchange swap sale for S/300 million. Likewise, yesterday coin repos expired for S/25 million.

Factors behind the rise

For Washington López, CEO of Washington Capital, the factors that have most influenced the upward trend of the dollar is the expectation that interest rates will continue to rise in the United States, which will cause the currency to continue strengthening worldwide and in Peru it will direct it towards S/3.90 by the end of the year.

He adds that the correction in metal prices has also had an impact. “Gold was trading at US$1,900 an ounce at the beginning of the year, now it is around US$1,700. Copper has also lost value. “Which has caused fewer dollars to enter the country.”

The reduction of the interest rate by the BCRP and the uncertainty over future climate risks such as El Niño are two internal reasons that have also pushed this trend. Finally, the specialist recommends taking out debts in soles, and if there are surpluses in the budget, it is a good opportunity to have deposits in dollars because a better return will be obtained.

The data

Eurozone. The dollar index posted its fourth consecutive day of gains and rose 0.461%. The euro fell 0.65% to US$1.0501 and the pound sterling was at US$1.2133, down 0.20%, according to Reuters.