Reuters: US Dollar Report: Peru cenbank ups reserve requirements to control credit boom

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Peru cenbank ups reserve requirements to control credit boom Dec 30th 2012, 19:30 Sun Dec 30, 2012 2:30pm EST * Bigger increase for dollar reserves than for sol reserves * Bank seeks to mitigate foreign currency borrowing risks BUENOS AIRES Dec 30 (Reuters) - Peru's central bank will raise reserve requirements next month to control a credit boom and discourage inflows of speculative capital while the local currency appreciates to 16-year highs, the monetary authority said on Sunday. Reserve requirements on bank deposits in sols will rise by 25 basis points in January while those for U.S. dollar deposits will climb by 75 basis points. "The bigger adjustment for dollar reserves seeks to mitigate the risks involved with foreign currency borrowing," the bank said in a statement. Prior to this measure, the central bank raised reserve requirement four times this year. The average reserve rate in soles stood at 17.8 percent, and 40 percent in dollars in October this year, according to central bank data. The sol closed at 2.552 per U.S. dollar on Friday, ending the year with gains of 5.72 percent despite record intervention by the central bank, which purchased $13.85 billion in U.S. dollars to curb the currency's advance. The bank bought dollars in the local spot market every day since Aug. 27 but only managed to slow the pace of the currency's appreciation, not stop it. Link this Share this Digg this Email Reprints

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