Gentle Upside Ahead

Having just closed below the PEN3.2570/US$ level for the first time in six years, the Peruvian sol may well be poised for further upside. Its fluctuations have been remarkably minor of late, not least because of concerted central bank intervention to stem the currency's strength, so we do not see a major near-term surge. Nevertheless, we are gently bullish, with sound fundamentals and an optimistic outlook underpinning the case for further appreciation. A depreciation below PEN3.265/US$ is unlikely; the unit may hit PEN3.200/US$ in the next three months, with extra impetus possible due to the globally weakening US dollar. A

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