Reuters: US Dollar Report: Peru's central bank raises reserve requirements

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Peru's central bank raises reserve requirements Aug 31st 2012, 16:39 Fri Aug 31, 2012 12:39pm EDT * Increases local, foreign currency requirement by 0.5 points * Seeks to put brakes on credit growth and currency's gains LIMA Aug 31 (Reuters) - Peru's central bank raised reserve requirements on Friday to control a credit boom and discourage inflows of speculative capital as the local currency trades at its strongest level in more than 15 years. The monetary authority said reserve requirements on bank deposits in sols and foreign currency would rise 0.5 percentage points from Saturday. It said in a statement that the measure sought to "moderate inflows of foreign capital into the country within a short period and control the rate of growing credit in a context of high foreign liquidity." Peru's central bank last raised reserve requirements in April and has been intervening regularly in the local currency spot market to control the sol's gains against the dollar. Abrupt fluctuations in the sol have long concerned officials because about half of Peru's bank deposits are held in dollars and many people and companies earn money in one currency but owe debts in the other. The central bank has held its benchmark interest rate unchanged at 4.25 percent for 15 straight months. The 12-month inflation rate will ease to below 3 percent sometime this year, the central bank has said, within its 1 percent to 3 percent target range. In June the average reserve requirement for the local currency was 16.0 percent and 39.8 percent for foreign currencies. Link this Share this Digg this Email Reprints

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