Peru's central bank raises reserve requirements
LIMA (Reuters) - Peru's central bank raised reserve requirements on Sunday 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 point from Monday.
The measure seeks to "moderate inflows of foreign capital into the country within a short period and control the rate of credit growth in a context of high foreign liquidity and exceptionally low global interest rates," the central bank said in a statement.
Low interest rates in much of the developed world have pushed investors to chase better returns in promising emerging markets.
Peru's central bank last announced in August it was raising reserve requirements 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 16 straight months.
In August, the average reserve requirement was 16.2 percent for the local currency and 39.5 percent for foreign currencies.
(Reporting by Omar Mariluz; Writing by Alexandra Ulmer; Editing by Dale Hudson)
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