Exchange rate: rise in the price of the dollar and stands at S/ 3.86

The price of American dollar in Peru closed higher on Tuesday as markets assimilated data from the inflation in the United States which was as expected and which increased the likelihood that the Federal Reserve adopt a less restrictive monetary policy.

While at the local level, Minister of Economy and Finance, Alex Contreraspointed out that for the month of March this year, a significant recovery in the peruvian economyafter the descent of social conflict. In addition, he predicts that this year the Gross Domestic Product (GDP) Peru will experience growth above 3%.

In this context, the exchange rate The Tuesday, February 14 session ended at S/3.8610 to the dollar, marking a slight rise of 0.09% from Monday’s close when it was quoted at S/3.8600, according to the data. updates from Central Reserve Bank (BCR) of Peru.

So far this year, the greenback accumulates a 1.42% lead over the last price of 2022, at S/3,807. Similarly, today (Tuesday), $483 million was traded in the market at an average price of S/3 ,8609.

The price of the american currency on the parallel market or in exchange houses, it is S/3.89, while at the counters of the main Peruvian banks, it is quoted on average at S/3.94.

Monday the peruvian soil Along with the Argentine peso, these are the currencies that have depreciated the most in the region. The two currencies are positioned among the worst performers against the dollar so far in 2023, against other emerging and Latin American currencies.

According to ranking of major latin american currenciescompiled by Bloomberg, the sthe peruvian it is the second worst performing currency in Latin America with a depreciation of 1.4%, followed by the Argentinian peso with a fall of 7.6%.

However, so far the Chilean peso is the currency that outperforms its regional peers with an appreciation of 7.3%. It is followed by the Mexican peso (5%), the Costa Rican colon (3.2%), the Uruguayan peso (2.3%), the Brazilian real (2.1%), the Colombian peso (1.4%) , the Paraguayan guaraní (0.8%) and the Dominican peso (0.8%).

So far this year, the RBC he carried out cash transactions on the trading table for 1 million dollars and auctioned foreign exchange swaps, with which the balance of these transactions increased by 111 million dollars.

Regarding the expectations of exchange rateaccording to RBCin January, they are between S/ 3.85 and S/ 3.90 per dollar by the end of 2023 and an expected range between S/ 3.85 and S/ 3.96 per dollar by the end of of 2024.

And if the political and social situation in the country remains calm or regulated, the american currency it could fluctuate this year between S/3.75 and S/4, according to financial analysts.

The trend towards dollarization of peruvian economy promoted the increase of new digital business throughout Peru, it is therefore expected that the presence of online exchange houses, the most popular business model in the region, will multiply in 2023, according to Omar Azañedo Sayán, CEO of Noncash.

According to the economist, the price and exchange of the national currency against the dollar it continues to be the commercial transaction that takes place the most on a daily basis in all the economic and commercial activities of the country.

“The vast majority of obligations such as rents, payments to suppliers and various financial products are made in dollarsas well as any investment, acquisition or purchase of assets, is done in the North American currency”, explained the expert.

This leads to an increase in digital businessin particular the online exchange houseswhich is a business model that is prominent in Peru.

According to Noncash’s projections, it should bring in more than $1,500 million in foreign exchange transactions around the year 2025, and they are looking for 1% of the foreign exchange market, estimated at more than 150 billion dollars per year.

In addition, it is expected that the presence of online exchange houses in the large districts of the capital and inside the country it will multiply this 2023.

At the start of the day this morning, the American dollar paid at the close of S/ 3.84 on averageso that it represented a variation of 1.51% compared to the value of the day before, which was S/ 3.78 on average.

Considering the last seven days, the American dollar shows an increase of 0.34%so that last year it still maintains an increase of 3.29%.

By comparing this data with that of the previous days, it ended two negative trending sessions. Referring to last week’s volatility, it is lower than the figure reached last year (17.9%), which indicates that in this last phase there are fewer changes than normal.

Sol is legal tender in Peru since 1991 and replaced the inti, which circulated between 1985 and 1991, at first it was also called “nuevo sol” to differentiate it from its predecessor, but in 2015 it was only called sol.

The origin of the new sun is understood after the world crisis of 1929, which led to a deep economic and monetary crisis in the country, as well as the creation of the Central Reserve Bank of Peru. It was during the first year of Alberto Fujimori’s government that nuevo sol was promoted to balance hyperinflation and reorganize the economy.

After its entry into force, one sol was equivalent to one million intis or one billion “old” soles; currently the currency is divided into 100 cents and its issue is regulated by the Central Reserve Bank of Peru.

Currently, coins of 10, 20, 50 cents, 1, 2 and 5 soles and banknotes of 10, 20, 50, 100 and 200 soles are in circulation. Previously, 1 cent coins were also minted, but they were withdrawn from circulation in May 2011, while in January 2019, 5 cent coins were withdrawn from circulation.

On the other hand, the exchange parity against the dollar and the euro is set daily by the agency in charge. Note that since 2014 the peruvian currency is depreciating.

The year 2022 ended in an eventful way for the Peruvian economy and among the main concerns or challenges for 2023 are high inflation, weak private investment and continued rising interest rates.

Although last year all economic activities that had been affected by the coronavirus pandemic restarted, recovery showed slow progress due to the crisis still raging in Peruvian homes.

Moreover, in its latest report, the National Institute of Statistics and Informatics (INEI) announced that poverty has increased over the past three years and it probably cannot be reduced this year due to the impact of higher inflation.

With a political crisis involved, 2023 is shaping up to be a tough year on the economic issue, however, the latest estimate of the Economic Commission for Latin America (Cepal) Peru could grow by up to 2.2%.