It is likely that the Peruvian Sol will continue to be under pressure against the U.S. dollar, as market participants cautiously analyze global economic trends.
Despite Peru’s economy growing by 3.53%, this figure indicates a slowdown compared to the previous month, influenced by weaker performance in the manufacturing and construction sectors. In contrast, the mining sector posted an 8.87% growth, solidifying itself as the fundamental pillar of the national economy.
Given these mixed results, the Central Reserve Bank of Peru may reevaluate its current monetary policy. With inflation on the decline and signs of economic cooling, a further interest rate cut could be on the table.
Should the central bank opt to reduce rates, we could see additional depreciation of the sol against the dollar. This would contrast with the possibly less aggressive stance of the U.S. Federal Reserve regarding rate cuts, potentially making the Peruvian currency less attractive in comparison.
Uncertainty surrounding the Chinese economy adds more pressure to the scenario. China, Peru’s main trading partner and a key importer of its mineral resources, is facing skepticism despite its efforts to stimulate growth. Weak copper demand not only exerts downward pressure on prices but also threatens Peru’s trade balance. If China’s stimulus measures are not effective, it is likely that the sol will continue to weaken, especially with upcoming key economic data from the Asian giant on the horizon.”
