ARS: Cracks Beginning To Appear

After trading within the relatively narrow range of ARS3.07-3.11/US$ throughout H107, the Argentine peso has been gradually weakening against the dollar since June, reaching ARS3.13/US$ at the start of August. The unit also experienced an alarmingly sharp sell off at the end of July, briefly touching on a level (ARS3.1850/US$) not seen since March 2003. While the country's economic expansion remains strong, and the currency is fundamentally undervalued in our view, a series of recent economic setbacks and heightened political risk in the run up to the presidential election could trigger further volatility in the near future. That said, we

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