Dollar: exchange rate reached 15 maximum falls so far in 2022

The dollar has lost 7.17% against the Peruvian sol so far in 2022, after a dreadful 2021 that was marked by the pandemicinflation and political uncertainty that reigned during and after the electoral process.

Despite this, the exchange rate price It already registers a total of 15 maximum falls in 2022, accompanying the downward trend, after closing at S/ 3,991 on December 31 of last year. Of the total records, nine correspond to January, three both to February and to March.

This is how the dollar has fallen

On the first two days of 2022, on January 3 and 4, the refuge currency succumbed -0.78% to settle at S/ 3.960; On Friday, January 7, the fall was -0.98% in the session and it was quoted at the close at S/ 3.931. From January 11 to 17, the greenback showed its most pronounced volatility When it fell five continuous days, it went from costing S/ 3,908 to S/ 3,855, 1.35% less. On January 20 and 21 the dollar it would set records again by trading at S/ 3,837 and S/ 3,835. On January 31, Mirtha Vásquez left the premiership; Despite this, the exchange rate did not change.

Juan Carlos Odar, director of Phase Consultores, told this newspaper that the downward trend was due to macroeconomic factors such as the price of copper. While Hugo Perea, head of research at BBVA Peru, stated that the volatility was due to the supply of dollars by investors throughout the month and “to the adjustments made by the central banks in the region.” Indeed, on January 6, 2022, the BCRP raised the benchmark rate to 3% for the sixth time since August 2021.

In February the streak in favor of peruvian sol continued, but only three intense drops were noted, in the framework of the swearing-in of two ministerial cabinets, that of Hector Valer and Hannibal Torres; a new adjustment of the monetary policy of the BCRP, the high inflation of the United States and the magnitude of the war reached by the armed conflict between Russia and Ukraine.

On February 9, the currency fell for the tenth time and stood at S/ 3,805 after Aníbal Torres was sworn in as prime minister and gave his support to a social market economy. Added to this was the confidence of the market in Minister Óscar Graham.

On February 10, the dollar hit a new low and reached S/ 3,740, a depreciation of -1.71%; Alberto Arispe, general manager of Kallpa SAB, highlighted that the fading of the political panic and the performance of commodities generated stability in the Peruvian exchange market. Seven days later, the dollar deepened its fall and stood at S/ 3,727. Gianina Villavicencio, Manager of Foreign Exchange Brokerage at Renta 4 SAB Peru, specified that the supply flow came from the AFPs and corporations for the payment of taxes.

Initially, the peruvian sol felt the ravages of the Russian invasion of Ukraine, on February 24 it barely rose to S/ 3,801 from S/ 3,750 registered a day before; but the aforementioned factors have cushioned further escalation.

So far in March, the safe haven currency has hit lows from seven or eight months ago. On day 7 it was quoted at S/ 3,725; three days later at S/ 3,713 and on the last Friday the 11th it reached S/ 3,705 (the lowest price of the Castillo era).

Adrián Armas, central manager of economic studies at the Central Reserve Bank of Peru (BCRP), pointed out that the strength of the Peruvian sol is in the greater supply and strong income tax collection of the mining sector, especially copper; the offer of Dollars from corporate companies for tax payments; and the low demand for greenbacks from companies in a “stability” scenario. Added to this is the recent rise in the rate of 0.50 basis points to reach 4%.

BCRP:

What happens to the dollar against Latin currencies?

Latin currencies are the ones that have presented the best performance against the dollarr in the world in these almost two and a half months of 2022. According to Bloomberg, the currency exchange in exporters such as Brazil, Colombia, Peru and Chile comes as the costs of oil, soybeans, iron ore and copper soar after the Russian invasion of Ukraine.

Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. expect more gains ahead as correlations with commodity prices tighten.

“Latin American countries could end up being one of the few ‘winners’ in this whole situation,” Brendan McKenna, a currency strategist at Wells Fargo Securities in New York, told Bloomberg.

At the local level, the report of the survey of macroeconomic expectations, carried out in December by the Central Reserve Bank of Peru, the economic agents predicted a price of between S/ 4.10 and S/ 4.15 per dollar by the end of 2022 ; forecasts were lowered in January to a range between S/3.99 and S/4.00; the recent February survey already places the exchange rate at S/ 3.90 by the end of the year.