Weak Peso Could Spell Problems

September 2006 | Economic Analysis

BMI View: Economy Minister Felisa Miceli recently highlighted the government's deliberate intervention in the foreign exchange market to keep the peso 25% below its 'natural' level. It is certainly true that the unit has recently fallen because of the government's interference, mainly to keep Argentine exports competitive and to stock up on foreign exchange reserves. Yet we maintain our core view that there are considerable downside risks to the currency.

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