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UPDATE 1-Peru central bank tightens deposit rules once more
March 27, 2013 / 3:41 PM / in 5 years

UPDATE 1-Peru central bank tightens deposit rules once more

LIMA, March 27 (Reuters) - Peru’s central bank raised deposit requirements on bank accounts denominated in dollars on Wednesday to curb heavy capital inflows that have lifted the local currency to approach a 16-year high.

The rules, designed to slow the pace of credit growth and encourage long-term investment instead of short-term, will take effect Monday in the fast-growing economy.

It was the eighth such move since May.

But both the central bank and the finance ministry have ruled out the use of capital controls and are relying on traditional measures to soak up excess dollar liquidity.

The central bank has kept its benchmark interest rate at 4.25 percent for about two years as inflation cools and the economy is on track to grow around 6.3 percent this year - one of the best-performing nations in Latin America in terms of the pace of growth.

The finance ministry has also said it will buy about $4 billion on the spot market this year to help the central bank soak up dollar liquidity.

The sol is trading around 2.59 per dollar.

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