International reserves are financial assets, such as foreign currencies and gold, that a country accumulates and maintains as support to guarantee economic stability and support for its national currency in the face of financial crises. In the case of South America, Peru generally occupies fifth or sixth place, depending on the indicators considered, such as Gross Domestic Product (GDP) or exports, among others. However, there is another relevant piece of information that captures the attention of economic analysts and institutional investors, both national and foreign: the Net International Reserves (RIN).
As is known, as of March 7, Peru has international reserves for a total of US$75.4 billion, according to data provided by the Central Reserve Bank of Peru (BCRP). This report reveals an increase of US$4.4 billion in Net International Reserves (RIN) so far in 2024.
The South American country with the largest international reserves in the region: Peru
Peru’s international reserves, valued at US$75.4 billion, represent 26.8% of our Gross Domestic Product (GDP). This places the country as a leader in South America and Latin America in terms of international reserves. This was reported by the BCRP.
If Peru is compared with other countries, according to the BCRP, during the year 2023, Peru’s asset reserves represented 26.6% of the Gross Domestic Product (GDP). Brazil, with 16.7%, and Colombia, with 16.4%, follow closely. On the other hand, Chile registers 13.7%, while Argentina barely reaches 3.1%. Thus, our country is positioned with a clear advantage over others, since even two years ago its reserves were equivalent to 29.3% of the Gross Domestic Product (GDP).
The BCRP is the central bank in charge of regulating monetary policy and the issuance of currency in Peru. Photo: BCRP
What are international reserves in Peru?
Assets in gold and other foreign currencies, known as international reserves, are resources that the Central Reserve Bank of Peru (BCRP) has to support the stability of the Nuevo Sol. These assets have several purposes, such as avoiding abrupt alterations in the exchange rate between the sol and the dollar, supporting imports, preventing external imbalances, and maintaining confidence in the country’s ability to meet its foreign debt payments. In addition, they serve to avoid financial crises in the event of large withdrawals of dollar deposits from banks.
Within the framework of globalization and the automation of financial markets worldwide, the rapid mobilization of capital can generate adverse effects on the local economy if adequate resources are not available to counteract possible negative consequences.
The benefits of Peru for having the largest amount of international reserves
Julio Velarde, president of the Central Reserve Bank of Peru (BCRP), has highlighted the solidity of the country’s international reserves, as he made it clear that this high level allows the monetary authority to intervene with credibility in the financial market. Specifically, he referred to the bank’s ability to intervene in the foreign exchange market and mitigate sharp fluctuations in the value of the dollar.
Source: Larepublica
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