Exclusive: Humala pledges fresh currency action
Peru will press ahead with measures to protect its currency from any rapid appreciation that could threaten its export sector, the country’s president Ollanta Humala has told LatinFinance in an exclusive interview.
"We are a dynamic economy and we are concerned about the
strengthening of the sol and the depreciation of the
US dollar," he said,
in his most extensive interview with the foreign press
since taking office in 2011.
who has been named Man of the Year by
LatinFinance, acknowledged that while central bank
intervention this year has helped stem the currency's rise,
authorities must remain watchful of renewed upward pressures as
strong inflows of capital continue entering Peru.
"We are also trying to create a capital market in
soles in which the finance ministry will intervene
with measures to avoid the arrival of short term capital," he
Authorities are prepaying $1.68 billion in multilateral debt
as part of a broader effort to weaken appreciation
Humala's comments also come in the wake of aggressive action
by the central bank that has led to a 1.9% decline in the
currency since January 1. The monetary authority has hiked
dollar reserve requirements and stepped up its sterilized
dollar purchases in the foreign exchange market.
Diversifying the country's export base away from raw
materials is a top priority of his administration, Humala said.
He stressed the need to shift the economy towards exporting
non-traditional goods, which he says already account for 30% of
"Peru is basically a raw materials exporter and our
principal partners are the European Union and China," he said.
"We are diversifying our economy to depend less on the sale of
raw materials and more on the non-traditional sector."
Humala pledged to redouble his administration's focus on
infrastructure development in order to preserve the country's
record growth streak. "We need more infrastructure, more
energy, more services," he said. "We need to reduce risks to
guarantee a sound economy and public policies to ensure that
growth is reaching the people who need it."
He said his government will prioritize investment in
transport, energy and telecommunications infrastructure. "My
legacy will include infrastructure," he said. "I do not think
that any government policy can be successful if we do not have
a successful economy."
Humala told LatinFinance his goals in office are
the same as those he promoted on the campaign trail.
"People say there are two Ollantas, one the candidate, the
other the president. But this is not true: I am the same person
who wants to follow through on my commitment,"
"We created the mining tax, but unlike those who did not
know me, who thought I was going to do it based on coercive
methods, threats of nationalization, we did it through dialogue
with the companies, explaining the country's needs," Humala
said. "That is what this is about: complying with my duty."
The president said that maintaining Peru's record economic
expansion was key to fulfilling his promise of social
inclusion. "We need to sustain growth…[but] the economic
model cannot only be focused on growth," he said. "We cannot
kill the goose that lays the golden egg, but create the
conditions for it to lay more eggs."
Peru's potential growth rate - the maximum rate output can
expand without the economy overheating - is widely seen at
between 6% and 6.5%. Officials expect the economy to grow at
6.3% in 2013.
Click here to read the full interview with Peru's
president Ollanta Humala