LIMA Oct 3 Peru's central bank wants to curb
speculative inflows of foreign capital by loosening restrictions
on how much of the country's private pension funds can be
invested abroad, the bank's manager said on Wednesday.
Julio Velarde, the manager, said he is discussing the policy
with the banking regulator. He said the foreign investment
ceiling for the country's private pension system would be raised
"gradually" and in response to fluctuations of the local sol
currency, which has strengthened 3.63 percent so far
this year against the dollar.
The central bank has bought a record number of dollars to
offset the sol's gains this year. It raised bank reserve
requirements for a third time on Sunday, as recent stimulus
measures announced in the United States and Europe have
encouraged foreign investments that are fueling Peru's rapid
credit expansion and growing demand for bonds.
"Obviously, ideally the pension funds would stay in Peru,
but as long as there are no new financial instruments, it is
necessary to have an escape valve to avoid an asset price bubble
locally," Velarde said.
Peru's private pension system is run by four funds that
manage some $30 billion, the most important source of investment
capital in the country.
Peruvian law allows private pension operators to invest up
to 50 percent of the assets they manage in foreign markets, but
the central bank now caps that at 30 percent.
Peru is on track to post growth of around 6 percent this
year, one of the fastest-paced economies in the region. Velarde
said he expects inflation to slow to 3 percent by the end of the
year, the upper limit of the bank's target range.