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Peru Closes Border to Stop Dollar Speculators

November 21, 1989

LIMA, Peru (AP) _ The government has closed its road borders with Bolivia, Chile and Ecuador to slow the flight of dollars after they soared to a record high on the black market as a hedge against galloping inflation.

Officials took the measure late Monday after the black-market dollar hit an unprecedented high earlier in the day. It was selling on the street for 11,200 Peruvian intis after opening the day at 9,200.

Finance Minister Cesar Vasquez Bazan said in a television interview Monday afternoon, ″There is no objective reason for the rise.″

Vasquez Bazan had said then the government would consider closing the Chilean border and enforcing stricter customs regulations to stop the ″double profits″ of speculators ″who make money on the dollar and then make money on the contraband″ they bring back to Peru.

He said many speculators cross the border into Chile with dollars and buy consumer goods to sell in Peru.

Victor Urbiola, prefect of the department of Puno 610 miles southeast of Lima, said by telephone on Monday night that the measure originally adopted for the Chilean border was extended to cover the Bolivian and Ecuadorean borders.

Urbiola said the two main roads into Bolivia were closed to traffic Monday night.

A spokesperson for the department of Tacna, 700 miles southeast of Lima, confirmed late Monday that the Chilean border had been closed.

Officials did not say how long the closures would last.

In the past two weeks, the price of the dollar has nearly doubled on the black market. Many people in Peru buy black-market dollars to offset the country’s hyperinflation, and many businesses obtain dollars to pay for imports on the black market.

The inflation rate for 1988 was more than 1,700 percent, and this year it is expected to top 3,000 percent.

The official exchange rate, which is used only for some government transactions and to pay for certain imports, was 4,557 intis to the dollar Monday.

Update hourly