So guess what happened on Monday? Yup, the PEN was dumped on from a great height as reported here by Bloomberg:
More insight was provided by Reuters today, who quoted central bank grande fromage Velarde (talking about the heavy reserve requirements he put on foreign money) as saying,
"We will not hesitate to raise (the requirements) to 150, 200, 240, 500 700, 1,000 percent -- this is the message,"
...which is a very cool quote, Reuterguys.
So remember, for cutting-edge Peru econ-analysis Schuldt's blog is the place to be. Or if you don't make it that far, you could have just read Otto's take on things:
".....A quick explanation: Y'see, before a foreigner could send U$100 over and put it all in PEN or Peru bonds or time deposit accounts or whatever she or he fancied. They'd make interest on the deposit, then also make money on when he changed his cash back to dollars cos the Sol was rising fast (check that currency chart again). But then in Feb 2008 central the bank slapped a 40% reserve requirement on non-Peruvians, meaning that if you wanted to invest U$100 in soles, you'd have to send U$140 over and the U$40 would just sit there in dollars doing nothing. And now, that requirement is U$120 sitting there doing nothing if you want to invest U$100 in the Peru system. Bye bye hot money, hello sexyworld of capital controls....."
...written on the 12th April. Yeah, you heard it here first...again. Cancel that Stratfor sub, yeah?
*also available in the links section of this blog over there on the right