Status Quo For Now

May 2005 | Currency Forecast

The government remains committed to its crawling peg depreciation mechanism, in order to assure the competitiveness of the export- and tourism-oriented economy. The rate of depreciation has held at 17 centavos per day since it was accelerated by 2 centavos last July. Although a move to a flexible exchange rate is on the cards in the medium term, we see the current crawling peg regime continuing to hold throughout 2005, particularly while inflationary pressures remain strong.

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