International Reserves and Forex Intervention in Peru
17 Pages Posted: 13 Dec 2019
Date Written: October 31, 2019
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: Suggested Citation