Against this backdrop, virtually all central banks in the region had to actively intervene in the foreign exchange market to reduce pressure on their exchange rates and prevent a feedback loop from the plummeting on the domestic demand for money. Thus, the two largest economies in the region have sold around USD 30 billion in the spot market.
Meanwhile, medium-sized economies, such as Peru, have sold almost USD 6 billion in order to stabilize their money markets as from October. Moreover, most central banks in the region have supplemented this generalized direct intervention with strong operations in derivatives markets, especially in the form of swaps. This explains why the private sector demand for money was below our calculations.