| LIMA, April 23
LIMA, April 23 Peru's central bank chief said
Wednesday that the finance minister was wrong to criticize the
monetary authority's handling of the local currency, in a rare
display of tensions between the country's top economic managers.
Finance Minister Luis Miguel Castilla had said this week
that the central bank's interventions in the spot market were
thwarting a transition to broader use of the local sol currency.
"When I speak with him I will tell him why we think he is
wrong," said bank president Julio Velarde in response to a
reporter's question about whether he should allow a faster
"de-dollarization" of the economy.
The central bank has intervened in the local spot market to
offset sudden gains made by the sol in recent weeks.
Castilla was quoted in the newspaper Gestion saying the
bank's policy of avoiding abrupt fluctuations in the currency
had led people to hold onto their dollars.
A spokeswoman with the finance ministry said Gestion's
reporting was generally correct, though she could not vouch for
any specific quotes.
The quarrel comes as the fast-paced economy has slowed to
one of its weakest growth rates in the past decade. Peru is a
top exporter of copper, silver and gold, but tumbling mineral
shipments and weaker prices have dampened growth.
Castilla also said this week that the central bank and the
banking regulator have been reluctant to work with him to better
prepare for tougher economic times.
"There is resistance to getting this done," Castilla said in
a videotaped presentation at an event on Tuesday. "Everyone
wants to defend his own fiefdom."
Velarde dismissed that idea, saying the central bank is
prepared for potential economic crisis.
"We always coordinate. We are clear about what needs to be
done at every moment, but we do not argue with the minister
through the press," Velarde said.
The central bank, which cut the interest rate for the first
time in four years last November, recently revised down its
forecast for economic growth this year to 5.5 percent from its
previous view of 6 percent.
Castilla, a technocrat and former World Bank economist well
respected by investors, is now widely seen as the most powerful
minister in President Ollanta Humala's cabinet.
(Reporting by Teresa Cespedes; Writing by Mitra Taj; Editing by