The decline was almost generalized against the main currencies (-9.5%) and began clearly since the Republican’s inauguration in January. The trade restrictions imposed by the US, contrary to what was thought, reinforced the bearish behavior of the dollar.
The institutional and fiscal weakening in that country as a result of measures announced by its authorities had the same effect.
In scenarios of this type, of risk aversion, it was usual, until before 2025, for investors to take refuge in the dollar; but a certain loss of confidence in the currency as a result of government policies in the United States, which are feared to deteriorate its economy and public finances, accelerated the decline of the greenback.
Central to this decline were also the three interest rate cuts by the Fed (Federal Reserve or US Central Bank). this year at a level of 3.75% and the two that the market anticipates in 2026.
Trump’s economic policies predict a deterioration in activity in the US, which weakens the dollar. (Photo by ANDREW CABALLERO-REYNOLDS / AFP)
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Biggest fall of the dollar against the sun in history
At the local level, the dollar fell 10.6% in 2025 against the sol (from S/ 3,761 to S/ 3,363), the largest annual fall in history, since the new sol instituted in 1991 with the economic reform replaced the inti.
In the international context described, of a weak dollar and the search for alternatives to that currency, metals gained unusual strength with successive records for copper, gold and silverwhich resulted in a huge income of the greenback linked to Peruvian exports, and in a trade balance surplus of almost US$ 33,000 million this year.
Surplus trade balance of almost US$33 billion depresses the dollar in Peru.
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Does the dollar stop being a refuge for investors?
This flow of foreign currency was a shock in the exchange market that caused the unprecedented fall of the dollar, although unfortunately the trend was also influenced by the foreign currency income from illegal miningas revealed to this newspaper by the executive director-sales & trading head of BTG Pactual, Félix Olivares, and the portfolio manager of Blum, Diego Marrero (Management 11/20/2025).
Olivares summarizes the reasons for the decline in the dollar: “First of all, the weakness of the global dollar is the relevant variable. Added to this are the high prices of commodities that the country exports, and the exports of illegal mining.”
In turn, the global decline of the dollar is due to the new dynamics of the US president, which cause great volatility and uncertainty; and the drop in the interest rate of the Network, he explains.
Although the dollar has not completely lost its status as a safe haven asset, some Asian, European and Latin American investors who acquire US securities, such as stocks or bonds, have now begun to hedge against exchange rate risk (due to the decline in the dollar) by purchasing derivatives, he details.
“This change is occurring in investment policies, which causes, by taking these hedges, other currencies to strengthen against the dollar,” Olivares says.
Félix Olivares, from BTG Pactual Perú, reveals an additional reason for the fall of the dollar.
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When will the dollar break S/ 3.30?
Their perspective is that in 2026 the dollar will continue to lose ground against the sun. In the first quarter, before the elections, the currency would accentuate its decline to less than S/ 3.30 due to the greater supply of the greenback related to the payment of company taxes.
Then, with a benign outcome of the elections or at least with finalist candidates “non-destructive”the currency would continue its downward trajectory, he estimates.
Even in a negative scenario in which a non-market-friendly candidate wins, the dollar would approach S/ 3.50, but then fall again, later rising but without reaching S/ 4. “because we know how the BCR reacts,” says the BTP Actual executive.
Jorge Ramos, director of market and investor relations at Fibra Prime, agrees that the coming year should be favorable for the sun, as variables come together that weaken the dollar, such as the change in the energy matrix, which requires copper. “We still talk about the commodity cycle, but there is a structural change that is the matrix transition; and there is also an appreciation of precious metals,” he claims.
The above implies more dollar income to the country, which generates appreciation of the national currency to such a degree that the BCR has intervened several times to moderate the trend, he adds. “From a macroeconomic point of view, the fundamentals are very solid for the sun, and there is a global fall in the dollar due to the Fed’s cycle of rate cuts, with which the flow of capital goes to currencies with higher returns. But politically there could be winds against the sun, although something very extreme would have to emerge (a candidacy with possibilities) for the dollar’s trend to change much.”says Ramos.
But before the electoral process the dollar would continue to lose against the sun, he projects.
