Peru Devalues Currency in Bid to Boost Exports
The government on Saturday devalued Peru’s currency by 16.6% in an effort to boost exports and reduce deficit spending.
Officials have blamed inflation--which reached a record 1,722% last year--for Peru’s fiscal and trade deficits.
The devaluation, announced in the official El Peruano newspaper, pushed the official exchange rate to 1,440 inti to $1, up from 1,200 to $1.
The government uses the exchange rate to pay exporters and to finance imports of vital drugs and food staples. The floating free market rate, which registered 1,550 intis to the $1 on Saturday, is used for nearly all other transactions.
The Economy Ministry said Saturday that March consumer prices rose 42% over prices in February.
Officials expect inflation to continue in the short term because of price increases but eventually decline as the economy stabilizes.
Earlier last week, the government increased by an average of 20% the prices of gasoline and subsidized foods such as wheat, cooking oil and rice.
By devaluing the inti, the government hopes to spur exports and reduce a growing trade deficit.
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