No Flying PYG

December 2005 | Currency Forecast

The guarani has ebbed and flowed this year in tandem with the price of soybeans, the country’s primary export. A 35% drop in prices of the commodity over the past five months have contributed to a 3.4% weakening in the currency over the same period, and the guarani continues to look weak. Short-term, the unit’s decline could extend to PYG6,300/US$, but we expect it to find good support there. Uninspiring macroeconomic fundamentals and political uncertainty are likely to limit significant longer-term upside,

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