Euro Experiences Fluctuations as Peru’s Sol Stands Strong Amid Economic Challenges

So far this year, the European currency has experienced ups and downs. (Infobae)

The euro is trading at the start of the day at an average of 4.01 soles, which represents a change of 0.87% compared to the 4.05 soles from the previous session.

In reference to the profitability of the last week, the euro records a decrease of 1.12%; however, on a year-on-year basis, it still maintains an increase of 0.77%.

Regarding previous days, it turns from the previous day when it marked an increase of 0.26%, without being able to set a defined trend recently. Referring to the volatility of the last week, it presents a balance lower than the volatility reflected in the figures from the last year, showing a value with fewer changes than indicated by the general trend in recent dates.

After a 2023 deemed one of the worst years for the economy, the Minister of Economy and Finance of Peru, Alex Contreras, has stated that conditions are in place for 2024 to be the year of recovery.

The government’s estimate is to achieve an expansion of the Gross Domestic Product (GDP) of at least 3%. “Setting aside the atypical year 2023, the Peruvian economy has a great capacity for growth. In general, what we foresee is a recovery, without the temporary factors that have recently played against,” said Contreras to the press.

The climatic phenomena, especially ‘El Niño,’ could have an unfavorable impact on the development of Peru’s economy, but the minister has expressed confidence in stability and in the investment projects that he expects to consolidate throughout the year.

Despite the political crisis currently facing Peru and against all odds, the economy of this country boasts of being one of the most stable in the Latin American region, as while other currencies have experienced fluctuations, the Peruvian sol has strengthened.

The coronavirus pandemic generated a series of negative economic effects worldwide – such as inflation – that, combined with Russia’s invasion of Ukraine and local monetary policy decisions, have weakened the dollar.

However, the Peruvian currency has shown resilience to these events and has strengthened against the greenback and the euro. If the positive factors that have supported the sol in recent months continue, the currency could maintain its current streak in the coming months and even years.

The Peruvian sol is one of the most stable currencies today.(Reuters)

The resilience of the Peruvian sol against other adversities that have managed to hit other currencies has made it a “safe-haven currency”, especially in countries where dollars have been scarce, such as in the case of Bolivia.

Although economic analysts have reduced their growth expectations for the Peruvian sol for the next two years, it is still expected that macroeconomic balances will continue to support the sol.

The sol has been the legal tender in Peru since 1991 and replaced the inti, which circulated between 1985 and 1991, initially also called the “new sol” to differentiate it from its predecessor, but by 2015 it is just called sol.

The origins of the new sol are understood in light of the global crisis of 1929, which led to a profound economic and exchange crisis in the country, as well as the creation of the Central Reserve Bank of Peru. It was during the first year of Alberto Fujimori’s government that the new sol was promoted to balance hyperinflation and reorder the economy.

After it was implemented, one sol was equivalent to one million intis or to one billion “old” soles; today, the currency is divided into 100 cents and its issuance is regulated by the Central Reserve Bank of Peru.

Currently, coins of 10, 20, 50 cents, 1, 2, and 5 soles and banknotes of 10, 20, 50, 100, and 200 soles circulate. Previously, 1-cent coins were minted, but these were withdrawn from circulation in May 2011, and the 5-cent coins went out of circulation in January 2019.