PEN: Momentum To Dwindle In 2012

Despite recently breaching resistance at PEN2.70/US$, and performing stronger than other regional currencies in spite of volatile global conditions, we believe the Peruvian nuevo sol (PEN)'s long-term appreciatory trend is about to run out of steam. In the current climate, we believe the unit will be hard pressed to break the PEN2.68/US$ historic high last experienced in 2008, and expect it to range trade over the near-term, with risks weighted to the downside. In the event of a serious spike of risk aversion, we expect strong support to be found around the 200 day moving average at PEN2.75/US$.

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