“I don’t see limits in the short term to the purchase of dollars because of sterilization factors,” Velarde said. “If we couldn’t sterilize because we were worried about inflation, we could also consider increasing reserve requirements.”

The sol’s 2.3 percent advance this year and 20 percent in the past five years stems from foreign investors buying sol- denominated government debt and households and companies shifting their savings to the local currency from dollars, Velarde said on a conference call with investors today.

The central bank has bought $7.7 billion in the spot market this year to soak up the additional supply, helping swell international reserves 17 percent to $57.5 billion at the end of April. After buying dollars the central bank issues sol certificates of deposit locally to drain the extra soles from the economy through a process known as sterilization.

“I don’t see limits in the short term to the purchase of dollars because of sterilization factors,” Velarde was quoted as saying by Bloomberg. “If we couldn’t sterilize because we were worried about inflation, we could also consider increasing reserve requirements.”

Peru’s sol rose 0.5 percent to 2.6375 per U.S. dollar this week, from 2.6510 on April 20, the steepest gain since the five days ending Dec. 2, according to Deutsche Bank’s local unit. The currency gained 0.2 percent today and last traded below 2.64 in December 1996, data from Peru’s financial regulator show.

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