The dollar was the protagonist of the Peruvian economy in 2021 due to the volatility it presented, since for much of the year it traded above S / 4.00. As of December 31, the greenback closed with an accumulated annual variation of 10.28% due to domestic and foreign factors.
The political tension
Enrique Díaz, former central manager of the Central Reserve Bank of Peru (BCRP), He told La República that “the instability of the dollar has been dominated mainly by the events caused by the electoral and political uncertainty in the country.”
The sol presented levels of variability not recorded since the financial crisis of 2008. Thus, after the first round (April 11), the BCRP reported that the intraday variation presented greater persistence and was more sensitive to new information on electoral preferences with You look at the second round The exchange rate reached a new high on June 7, trading at S / 3,938, when Castillo Terrones surpassed Keiko Fujimori in the official count, who denounced an alleged fraud and led to the exchange rate reaching S / 3,986.
A new administration began on July 28, but the continuous clash between the prime minister and the parliamentary opposition reinforced political instability, which prevailed in the perception of economic agents.
The designation of Guido Bellido as premier he took the dollar to S / 4,007; and it continued to increase due to proposals such as the nationalization of Camisea and a question of trust by former minister Iber Maraví.
“The errors of the Head of State and the obstacles of the Legislature were the beginning of a period of fights with threat of censorship and unfortunate statements, which caused the climate of uncertainty to extend in time much longer than necessary,” said Matías Maciel, CEO of Rextie.
On October 6, the safe haven currency was S / 4,138. Bellido resigned and was replaced by Mirtha Vásquez.
“The prime minister represented a very tough wing of the left and then we saw how after his departure the dollar fell sharply; that is, the sun was appreciated and it remained relatively stable, “said Jorge Ojeda, professor of Finance at the UPC.
On October 7, the Executive ratified Julio Velarde as president of the BCRP, who was sworn in on November 2 along with Roxana Barrantes, José Távara and Germán Alarco. However, Congress delayed the composition of the entity’s board of directors when the dollar climbed above S / 4.00 again.
In mid-November, the greenback would again undergo upward pressure due to the announcement of a vacancy motion, which was supported by the right-wing banks, but rejected on December 7. In that period, the dollar traded between S / 4,008 and S / 4,080.
“The confrontations between Congress and the Executive are less noisy now, but it is a truce because as there is not such a clear direction regarding the economic policy that the Executive is taking, that is latent. There is still no Cabinet that has sufficient technical solvency or the vision of how to manage the economy in general, ”said Díaz Ortega.
The international impact
Enrique Díaz, also president of the MCIF consulting firm, attributed as another factor of the increase in the exchange rate to the global inflationary situation “In which the prices of commodities, many inputs and situations of scarcity have skyrocketed.”
In November, in the USA the rate of inflation it was 6.8%, the highest since June 1982. In the UK, the 5.1% rate was the highest in ten years. And in the eurozone, the 4.9% figure was the highest since July 1991.
On the other hand, Maciel said that the dollar showed an appreciation in the US since the Fed’s announcement to raise interest rates. “We know that increases the attractiveness of the dollar and reduces the cost of opportunities and aversion to risk.”
Without clear forecasts
Our respondents agreed that it is difficult to predict the behavior of the greenback in the future, but that it will depend – once again – on internal and external variables.
“The world is a little alarmed by omicron And it will depend on the response of the countries. In Peru, we would have to wait for the first two weeks of 2022 and see how the variant and political uncertainty develop ”, Ojeda said.
The world’s leading banks such as Morgan Stanley predict a stronger dollar in 2022, except that their advance will be moderate. “This is because traders have been at the forefront of an aggressive Federal Reserve, choosing to buy the world reserve currency against virtually all of its peers before borrowing costs rise,” they pointed out to Bloomberg.
Impact of local and regional depreciation
From October 6 to 14, the dollar depreciated by -5.27%, while in the period between July 29 and October 6 (Bellido as prime minister), the Peruvian sol fell by -5.35% .
In 2021 the dollar rose 10.28%. The price of chicken per kilo in markets in December 2020 was S / 8.65 and in December 2021 it was S / 10.43. The difference is S / 1.78. “This means that 85 cents of the increase in chicken corresponds to the increase in the dollar and approximately 93 cents to other factors,” said Jorge Luis Ojeda.
In the first quarter of 2021, the currencies of the region depreciated due to the increase in inflation expectations.
Data
Expectation. The economic agents foresee that the exchange rate will close in 2022 at S / 4.14.
Intervention. Until December 29, the BCRP made spot sales at the negotiating table for US $ 11,550 million.
The word
Enrique Díaz, economist
“The instability of the dollar has been dominated mainly by the events caused by the electoral and political uncertainty in the country (…) Also by the global inflationary situation.”
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