GTQ: Still Wary Long Term

The recent rally in the Guatemalan quetzal is testing our bearish outlook for the currency, but we are not yet convinced that this is anything more than seasonal appreciation. January and February are traditionally the strongest months for the currency, but if 2010 is anything to go by, strength at the start of the year does not mean a strong performance for the remainder of the year. With high global commodity prices likely to erode Guatemalans' purchasing power over the first half of 2011, and investor uncertainty growing in the run up to September's general election, we would be surprised

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