LIMA Dec 10 Peru's banking regulator further
restricted the ability of banks to make big bets in the currency
market on Monday in the government's latest move to blunt the
sol's gains to a 16-year-high.
Under the new rule, which Peru's SBS banking regulator had
circulated for a hearing period in October, banks' positions in
derivatives will be limited to 20 percent of their assets as
defined by regulators or 300 million soles ($116 million).
The previous limit had allowed banks a ceiling of 25 percent
of their assets or 500 million soles.
The SBS also trimmed the net short position that banks can
take in the currency market to 10 percent of assets and banks'
net long position to 50 percent of assets.
"As a measure of prudential macro regulation, it's necessary
to change limits on short and long positions in foreign
currencies, and net derivative positions," the regulator said in
Peru's official gazette.
The sol has appreciated this year as the U.S. dollar slumps
globally and the Federal Reserve keeps monetary policy
Because Peru's sol is not fully convertible, some of the
pressure on it has come from derivatives, especially the growing
market for non-deliverable forwards, or NDFs.
Traders have said limits on positions in the forwards
market, along with the central bank's frequent interventions in
the spot market and increases in bank deposit requirements, have
had a limited impact on the sol.
It ended at a bit stronger on Monday at 2.571 per U.S.
dollar - a new high.
The central bank bought $60 million in the spot market on
Monday, adding to the record $13 billion it has bought so far