Peruvians ditch the dollar, move savings to soles

By Dana Ford

LIMA, April 30 (Reuters) - Max Campos, one of hundreds of money changers who works the street corners of Lima, Peru's capital, spent years trying to get his hands on U.S. dollars. Now he dumps them for the once beleaguered Peruvian sol.

Campos, 32, has become part of a sea change of savvy consumers helping to break the Peruvian economy's link to the dollar faster than the government expected.

In recent weeks, after years of trailing the dollar, the sol <PEN=PE> has become the dominant currency of bank deposits in Peru. The sol now makes up nearly 52 percent of all deposits, up from 39 percent a year ago.

"There is more confidence in the sol right now," said Campos, who two months ago switched his personal bank accounts from dollars into soles.

The accelerating trend marks a welcome change for the government, which has been trying to de-dollarize the economy for years, sometimes with limited success.

In decades past, rampant inflation tore away at the buying power of deposits in the country's currency, driving Peruvians to buy dollars as a hedge against inflation. To crack down, President Alan Garcia in the 1980s froze and then seized dollar bank accounts in his first term in office, telling Peruvians to withdraw funds in the country's currency, then called the inti, named after the Inca sun god.

Garcia's successors liberalized the banking system and the dollarization process resumed apace, driving the amount of dollars in the banking system to more than 80 percent at its peak.

People have been slowly gaining confidence in the sol over the last decade as inflation has ebbed. More recently booming domestic growth and a weakening dollar globally have boosted the the sol's popularity.