Dollar Price in Peru Maintains a Downward Trend: Down 3.9% in First Three Weeks of 2022

The dollar presents, this Friday, April 1, 2022, a price of S/ 3.6350, according to Bloomberg, with a fall of 1.23% since yesterday's close. In this way, the foreign currency has accumulated a 3.9% decrease compared to the end of 2021, considering that it closed the year at S/3,989 soles.

This is the fifth consecutive drop reported this week. A similar quote has not been recorded since mid-May 2021. Thus, it is estimated that so far in 2022, the price of the dollar has fallen by a total of 7.79% compared to what was reported at the close of the previous year.

Considering the last day of each month, the evolution of the exchange rate has been as follows: July 2021 (S/4,058 soles), August (S/4,088 soles), September (S/4,136 soles), October (S/3,992 soles), November (S/4,066 soles) and December 2021 (S/3,989 soles), according to the Central Reserve Bank (BCR).

PRICE OF THE DOLLAR

According to a recent report from the portal cuantoestaeldolar.pe, in foreign exchange traders the price of the dollar for the purchase is S/3,630 for the sale is S/3,680 on average.

On the other hand, banks calculated that before the day the purchase price of the dollar was between S/3.59 and 3.70 and for the sale it is between S/3.71 and S/3.86.

FACTORS FOR THE DECLINE OF THE DOLLAR

The economist Jorge Gonzales Izquierdo explained to the newspaper El Peruano that this reduction is explained by the level of political uncertainty generated by the clashes between the executive and legislative branches, and the BCR's countercyclical policy of raising interest rates to contain inflation. He points out that the dollar has been falling since the second half of December and this is due to the fact that political problems would no longer have the sharpness of the first months, when the dollar remained above S/4 soles.

On a purely economic level, the economist mentioned that another factor for the decline of the US currency is the countercyclical policy of the BCR, which has chosen to raise interest rates to counteract the increase in prices (inflation).

On the other hand, this situation would be attracting transitional capital or swallows that see greater profitability in the Peruvian square, but it could change when the US Federal Reserve also increases its interest rates.

Gonzales Izquierdo also mentioned that another factor that is beginning to become visible is the high prices paid for minerals in the international market, which generates greater income of dollars to the Peruvian market and naturally with a lower price.

INFLATION IN PERU

However, this occurs in a scenario where inflation has been reaching levels that have not been perceived for decades. Figures from the National Institute of Statistics and Informatics (INEI) indicate that:

“The national inflation rate for March is 1.5, the highest in the last 10 years. Cumulative inflation in the last 12 months, since March 2021, is 7.46: also the highest in 10 years. If one analyzes only for the city of Metropolitan Lima, the Consumer Price Index (CPI) is 1.48, the highest inflation in 26 years. The same is true for the CPI for Lima (region), which is 6.83: a figure not seen in more than 20 years,” said economist and political analyst Miguel Santillana.

KEEP READING