Peru’s central bank aggressively intervened in foreign exchange markets throughout December, spending nearly $4 billion to moderate teh appreciation of the Sol against the U.S. dollar. The Banco Central de Reserva del Perú (BCRP) took action as global economic shifts and rising commodity prices put downward pressure on the dollar,a trend prompting concerns over export competitiveness. According to analysts at Renta4 SAB, without these interventions, the sol would have likely strengthened beyond levels seen throughout 2023.
Peru’s central bank intervened heavily in the foreign exchange market throughout December, purchasing nearly $4 billion to counter a significant strengthening of the Sol against the U.S. dollar. The interventions were aimed at moderating exchange rate volatility, according to Carlos Prieto, manager of Economic Studies at BCP.
Without the central bank’s actions, the Peruvian currency would have likely fallen further below the levels seen throughout last year, Prieto indicated. The moves come as investors reassess global economic conditions and commodity prices.
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December Market Dynamics
The month began with a pronounced downward trend for the dollar, prompting the Banco Central de Reserva del Perú (BCRP) to enter the spot market on December 3rd and 4th, acquiring a total of $345 million to defend a level of S/ 3.36, according to Renta4 SAB. This intervention followed sales of local bonds by foreign accounts, spurred by rising copper prices.
The downward pressure intensified on December 11th following a 25-basis-point rate cut by the U.S. Federal Reserve, and solidified later that week when the BCRP opted to hold its benchmark interest rate at 4.25%, reinforcing monetary support, Renta4 SAB noted.
During the second half of December, the global dollar weakened further as U.S. inflation data came in at 2.6% and unemployment reached 4.6%. Simultaneously, gold prices surpassed $2,400 per ounce and copper approached $8,400 per metric ton, driven by geopolitical factors.
Annual evolution of the dollar
Renta4 SAB noted that this external context coincided with seasonal corporate demand for tax and bonus payments, coupled with the liquidation of foreign positions. In response, the BCRP intervened in six consecutive sessions, peaking at $323 million on December 22nd, accumulating purchases exceeding $1.3 billion that week to maintain the exchange rate within a range of S/3.3650 to S/ 3.3680.
As the year closed, silver and gold reached new highs, and copper posted its strongest performance since 2009, while the global dollar accumulated an annual decline of 8.1%. These factors accelerated the supply of dollars in the local market, necessitating the BCRP’s intervention.
The central bank purchased $436 million on December 30th and concluded the year with a final purchase of $180 million, resulting in a closing exchange rate of S/ 3.3620. The BCRP’s active management of the market was directly responsible for stabilizing the exchange rate amid global downward pressure.
A stable start to 2026 is anticipated, with BCRP demand providing a floor at S/ 3.36 and corporate supply limiting the ceiling at S/ 3.37. The market is expected to proceed with caution in January, awaiting the Federal Reserve meeting and the appointment of its new president.
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