Dollar in Peru: why does the exchange rate continue to fall and how much would it close in 2024?

After ending 2023 with a downward trend, the dollar has maintained a new appreciation this year with some falls in recent days. For example, this Wednesday, March 13, the exchange rate fell 0.27% compared to the day before and It closed at S/3.6740, according to the exchange session of the Central Reserve Bank of Peru (BCRP). For its part, in the parallel market, the purchase price was S/3.66 and the sale price was S/3.69.

There are various external and internal factors to explain the behavior of the American currency. However, what we can mention is that the Peruvian sol is the second currency that has lost ground the least; since, until the beginning of this month, our national currency has depreciated 1.68% against the dollar, according to Bloomberg. To address the reasons for the fall of the dollar in this third week of March and the projections towards the end of 2024, La República collected the opinions of specialists.

Price of the dollar in Peru: why does the exchange rate continue to fall?

The exchange rate closed lower again this Wednesday, March 13 and, in this way, consolidates a trend of declines. Last week it had ended with a new drop of 1% against the Peruvian sol and accumulated a regression of -0.46% so far this year, as well as a variation of -2.89% in the last 12 months.

To better explain the evolution of the dollar, we go back to February, the month in which the dollar ended at S/3.7810, while in January it closed the exchange session at S/3.8090. Now, it is located at S/3.6740 and is still far from the S/3.8810 of Friday, October 20, 2023. According to Jorge Luis Ojeda, professor of Finance at the UPC, there are external factors to explain the behavior of the North American currency in recent days, such as difference in inflation that exists between Peru and the United States.

“We must take into account the relationship that our country has with the nation that is a reference for the dollar, the United States. There is an expectation that interest rates in the United States are going to remain high. While, in Peru, The BCR is going to give its quarterly inflation report, in which it is most likely that we will be close to the target range and, suddenly, an interest rate cut is announced. Faced with this scenario, it becomes more attractive for investors. investors,” he explained.

For his part, Javier Pineda, CEO of the digital exchange house Billex, said that the decision of the board of directors of the Central Reserve Bank (BCRP) to maintain the key interest rate of 6.25% in March, after cutting it in the six previous months, caused a opposite effect on the exchange rate that began to fall again.

“By maintaining the interest rate by the BCR, it made the expectation go contrary and the price of the dollar began to fall again. That is, the sun had a strengthening position that caused the exchange rate to begin to decrease and what we see “Now it is a little bit about what is happening or the expectations that exist as a result of this BCR policy of not lowering the interest rate. So, we believe that there should be a rate cut policy in soles because it helps economic growth.” , support.

What is the projection of the dollar exchange rate for this year?

According to the latest survey of macroeconomic expectations carried out by the Central Reserve Bank of economic agents, The exchange rate would close this year between S/3.75 and S/3.80. In that sense, the forecast of economic analysts regarding the behavior of the dollar will be downward. If, for example, in December 2023, they believed that it would close at S/3.78 and in January at S/3.75, for February, their estimates project the same figure. On the other hand, in non-financial companies and the financial system they remain at the rate of S/3.80.

For its part, BBVA Research reports that the exchange rate will close the year in a range between S/3.85 and S/3.95 per dollar, while inflation would end 2024 at around 2.6%.

“We see a dollar that may be ending at S/3.75. That is, the price of the dollar should rise a little, being an opportunity for those who dare to buy something in the North American currency and, in this way, an eventual increase can be realized,” said Javier Pineda of Billex.

Finally, economist Jorge Luis Ojeda said that the trend in the price of the dollar will continue to be very similar, as long as internal or external factors do not appear to alter its behavior. “I believe that the exchange rate is going to rise and will be around S/3.70 or S/3.80but I don’t think it will even overcome the barrier of the latter, unless something happens in the world or in Peru.”