In April, Peru’s Congress approved the 7th AFP withdrawal. This past week the SBS gave the AFPs additional flexibility to manage the withdrawals in order to mitigate the need to sell assets prematurely and negatively impact the composition and performance of the portfolios. The limits on FX purchases and sales have been temporarily suspended until September 2024, lifting what has been a binding constraint for certain AFPs looking to sell more foreign currency assets. This provides scope for the AFPs to limit the sales of domestic bonds as they raise more marginal cash from foreign assets.
For more, including views on FX and local rates, please see full note.