International Reserves and Forex Intervention in Peru

17 Pages Posted: 13 Dec 2019

See all articles by Renzo Rossini

Renzo Rossini

Central Reserve Bank of Peru

Adrián Armas

Central Reserve Bank of Peru

Paul Castillo

Central Reserve Bank of Peru

Zenon Quispe

Central Reserve Bank of Peru

Date Written: October 31, 2019

Abstract

This paper reviews the Peruvian experience in using FX intervention and reserve requirements for macroprudential purposes, with the aim of limiting the financial risks associated with dollarisation. Peru is a successful market-driven case of dedollarisation, which reflects both macroeconomic stability and prudential policies. Since the adoption of inflation targeting in 2002, core inflation has been on average 2.1%. During the same period, financial dollarisation has declined steadily, from levels close to 80% to less than 30%. Besides delivering low and stable inflation, the current monetary policy framework has also contributed to providing an effective response to the global financial crisis, by limiting its spillover effects on the domestic financial system.

Full Publication: Reserve Management and FX Intervention

Keywords: monetary policy, central banking, FX intervention, dollarisation

JEL Classification: E52, E58, F31

Suggested Citation

Rossini, Renzo and Armas, Adrian and Castillo, Paul and Quispe, Zenon, International Reserves and Forex Intervention in Peru (October 31, 2019). BIS Paper No. 104q, Available at SSRN: https://ssrn.com/abstract=3501123

Renzo Rossini (Contact Author)

Central Reserve Bank of Peru

Jirón Miroquesada 441
Lima, Lima 1
Peru

Adrian Armas

Central Reserve Bank of Peru

Jirón Miroquesada 441
Lima, Lima 1
Peru

Paul Castillo

Central Reserve Bank of Peru

Jirón Miroquesada 441
Lima, Lima 1
Peru

Zenon Quispe

Central Reserve Bank of Peru ( email )

Jirón Miroquesada 441
Lima, Lima 1
Peru

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