Emerging Markets Rates and Currencies Handbook

Peru (PEN - Peruvian Sol) Citi in Peru Since 1920, Citi Peru has had an uninterrupted presence in the country. Citi Peru provides corporate and investment banking services, including corporate financing bond issues on the domestic and international markets and cash management services. Market Overview The Central Bank of Peru (BCRP) manages the Peruvian monetary policy as an autonomous institution with an inflation targeting regime aimed at maintaining price stability. It allows free convertibility of the PEN and, although it manages the FX rates under a flotation regime, it actively intervenes in the FX market through different products and mechanisms. Given the fact that the full convertibility allows multi-currency management in local balance sheets, and that the local economy is still somewhat dollarized, BCRP’s interventions are intended to limit excess price volatility, not to target specific USDPEN levels. Peruvian FX predominantly operates as a free market. Although central bank interventions in the local market are frequent, the BCRP does not impose controls on exchange rates or transactions. Convertibility Fully Convertible. Interest Rate The Bond Market in Peru is still growing steadily in terms of volume traded. Trading volumes have increased from approximately USD 30bn in 2018 to USD 54bn in 2022, this has allowed bid-ask spreads to narrow. The Peruvian economy holds with stronger fundamentals than the region facing a positive scenario for global rates over the medium/long term. In terms of reference rates, there is currently only a fixed rate market. There is no floating rate benchmark and despite recent discussions, there is no clear time frame in which to expect its development. 244