ARS: Turning More Constructive

The Argentine peso has seen a pause in its steep descent in recent months, stopping just short of its 2002 all-time low at ARS3.8900/US$, suggesting that the Banco Central de la República Argentina (BCRA) may be countenancing some modest appreciation. Although there are many lingering caveats, both on the political and economic fronts, it looks as though the unit could see more stability going forward, as reflected by a significant re-calibration of depreciatory expectations in the forward markets, and we have accordingly revised our end-2009 and 2010 forecasts to ARS3.8000/US$ and ARS4.0000/US$, respectively.

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