Central Bank incorporates foreign exchange swaps under the modality of fixed interest rate in soles
7 octubre 2021

PERU

On October 7, the Central Reserve Bank (BCR in Spanish), through Circular No. 0028-2021-BCRP, approved the incorporation of foreign exchange swaps under the modality of fixed interest rate in soles as a new instrument, in order to have a wider range of intervention alternatives in the foreign exchange market and moderate the volatility of the dollar. The regulation states that under this modality, one of the parties assumes the commitment to pay a fixed interest rate on an amount in local currency. In turn, the other party must pay a fixed interest rate on an equivalent amount in U.S. dollars. The circular is already in force.

The rule states that the BCR will indicate in the call for the auction or direct placement the interest rate applicable to the notional amount in local currency. Likewise, the central bank reserves the right to reject the proposals presented in the auctions or direct placements, without giving any reason. In addition, through this new instrument, the monetary entity will be able to expand its interventions in the foreign exchange market by using financial derivatives for longer terms.

Proposals must be submitted to the Management of Monetary Operations and Financial Stability, through the Bloomberg Electronic Auction Platform (PES in Spanish) or DATATEC, as established by the BCRP. Each proposal must contain the amount and the fixed interest rate applicable to the notional amount in dollars, expressed as a percentage with two decimal places.

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