The decline was almost across the board against major currencies (-9.5%) and clearly began after the Republican inauguration in January. Trade restrictions imposed by the US, contrary to what was expected, strengthened the dollar’s bearishness.
The institutional and fiscal loosening in that country as a result of the measures announced by its authorities had the same effect.
In risk-averse scenarios, investors typically turned to the dollar until 2025; but a certain loss of confidence in the currency as a result of government policies in the United States, which are feared to worsen its economy and public finances, accelerated the fall of the dollar.
Central to this decline were also three interest rate cuts by the Fed (Federal Reserve or Central Bank of the United States). this year at 3.75% and two that the market expects in 2026.
Trump’s economic policy predicts a deterioration in activity in the US, which weakens the dollar. (Photo by ANDREW CABALLERO-REYNOLDS/AFP)
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The biggest fall of the dollar against the sun in history
Locally, the dollar fell 10.6% against the salt in 2025 (from S$3,761 to S$3,363), the biggest annual drop in history since the new salt, introduced in 1991 with an economic reform, replaced the inti.
In the described international context of a weak dollar and the search for alternatives to this currency, metals have gained extraordinary strength consecutive records for copper, gold and silverresulting in a huge greenback gain associated with Peruvian exports and a trade surplus of nearly US$33,000 million this year.
A trade surplus of nearly US$33 billion is weighing on Peru’s dollar.
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Is the dollar ceasing to be a haven for investors?
This flow of foreign currency was a shock in the exchange market that caused an unprecedented drop in the dollar, although unfortunately the trend was also affected foreign exchange earnings from illegal miningas BTG Pactual’s executive director of sales and trading, Felix Olivares, and Blum’s portfolio manager, Diego Marrero, told this newspaper (Guide 11/20/2025).
Olivarez summarizes the reasons for the fall of the dollar: “First of all, the weakness of the global dollar is a relevant variable. Added to this are the high prices of the goods that the country exports and the export of illegal mining.”
In turn, the global fall of the dollar is associated with the new dynamics of the US president, which causes great volatility and uncertainty; and the drop in the Net interest rate, he explains.
Although the dollar has not completely lost its status as a safe-haven asset, some Asian, European and Latin American investors who purchase US securities such as stocks or bonds have now started to hedge against exchange rate risk (due to the dollar’s decline) by purchasing derivatives, he details.
“These changes are happening in investment policy, which is causing other currencies to strengthen against the dollar,” he said. – says Olivares.
Felix Olivares of BTG Pactual Perú reveals another reason for the dollar’s decline.
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When will the dollar break S/3.30?
Their view is that the dollar will continue to lose ground against the sun in 2026. In the first quarter, ahead of the election, the currency will accentuate its slide to less than S/3.30 due to a greater supply of the greenback linked to the payment of corporate taxes.
Then with a good outcome of the elections or at least with finalist candidates “indestructible”the currency will continue its downward trajectory, he believes.
Even in a negative scenario, if a non-market candidate wins, the dollar will approach S/3.50, but then fall again, later rise, but not reach S/4. “because we know how BCR reacts”, says the CEO of BTP Actual.
Jorge Ramos, director of market and investor relations at Fibra Prime, agrees that the coming year should be favorable for solar as variables combine to weaken the dollar, such as the changing energy matrix that requires copper. “We still talk about the commodity cycle, but there is a structural change that is a matrix transition; and there is also an increase in the price of precious metals.” he claims.
The above implies more revenue in the country’s dollars, creating an appreciation of the national currency to such an extent that the BCR has intervened several times to moderate the trend, he adds. “From a macroeconomic perspective, the fundamentals are very strong for the sun, and there is a global drop in the dollar due to the Fed’s rate cut cycle, with capital flowing into higher yielding currencies. But from a political point of view, there could be wind against the sun, although something very extreme (candidacy with possibilities) would have to emerge for the dollar trend to change significantly.”says Ramos.
But until the beginning of the electoral process, the dollar will continue to lose against the sun, he believes.
