LIMA; Peru's central bank will keep buying dollars in the local foreign exchange market after pushing the sol back 1.53 percent this year with $3.9 billion in interventions so far, the bank's president said on Wednesday.
The sol currency ended bidding 5.72 percent stronger last year despite the central bank's record $13.9 billion purchases as Peru's strong economy and stimulus measures abroad helped stoke the sol's advances.
"We will probably continue buying (dollars)," Central Bank President Julio Velarde said, as he emphasized that the interventions seek stability and not a specific price for the sol.
"We don't have a ceiling or floor or any goal with respect to the exchange rate," he said.
The central bank has tightened reserve requirements on banks and raised the foreign investment ceiling on pension funds several times in a bid to soak up excess liquidity as foreign investors seek higher yields in emerging economies like Peru's.
Velarde said the central bank wants to let Peru's pension managers invest even more abroad. Peru's private pension funds managed $38.8 billion in February.
Pension fund managers have asked the central bank to raise the legal limit for investing in foreign markets to 50 percent, up from 34 percent now.
Velarde also said that inflation in March would come in less than the 0.7 percent increase registered in the same month of 2012.
Annual inflation in Peru was 2.45 percent in the 12 months through February, and the central bank has said it expects inflation to slow to its goal of 2 percent in coming months.
<Center><b><i>Copyright Reuters, 2013</b></i><br></center>
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