1 Sol (Peruvian Air Force) – Peru

In 2019, Peru's currency, the sol (PEN), demonstrated notable resilience and stability despite regional economic turbulence and domestic political uncertainty. Throughout the year, it traded within a relatively narrow band, ending the period with only a modest depreciation of approximately 1.5% against the US dollar. This performance was underpinned by strong macroeconomic fundamentals, including low inflation (within the Central Reserve Bank of Peru's target range of 1-3%), substantial foreign reserves exceeding $68 billion, and a consistent current account surplus driven by robust mineral exports, particularly copper. The Central Bank's credible monetary policy and a history of fiscal prudence provided a solid anchor for the currency, insulating it from the more severe volatility seen in some neighboring economies.

However, this stability was maintained against a backdrop of growing political headwinds. The year was marked by significant institutional conflict between President Martín Vizcarra and the opposition-led Congress, culminating in Vizcarra's dissolution of the legislature in September. While this political crisis triggered brief spikes in volatility and led to some investor caution, the direct impact on the sol was muted and short-lived. Market confidence was largely preserved because the political turmoil did not fundamentally alter Peru's sound economic management or its commitment to open markets and central bank independence.

Looking at the broader financial context, 2019 was also a year of transition in global monetary policy, with the U.S. Federal Reserve shifting from tightening to cutting interest rates. This shift, which typically reduces pressure on emerging market currencies, provided a favorable external environment for the sol. Consequently, Peru ended the year with one of the strongest and most stable currencies in Latin America, a testament to its institutional economic buffers even as its political landscape grew increasingly fragmented and unpredictable.