UYU: Trade Adjustment Paves Way For Steady Appreciation

Central bank intervention on the foreign exchange market in April and May, to the tune of US$105mn, has capped the Uruguayan peso's recent ascent, preventing the unit from pushing above UYU23.00/US$ since its 6.9% sell-off in February. Nevertheless, we expect the peso to make another appreciatory run against the US dollar, targeting technical resistance at UYU22.50/US$ in the near term.

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