Macroeconomic Forecast Guaraní Making Gains

September 2007 | Macroeconomic Forecasts

BMI View:The Paraguayan guaraní has made strong gains against the dollar since late August, reaching a four-month high of PYG5,020/US$ on September 10. The move is likely to be as much a feature of US dollar weakness as it is renewed guaraní strength, though amid surging Paraguayan inflation, its likely that the central bank - which manages the unit closely - will allow for some appreciation. This is particularly pertinent given the guaraní's 7% decline in 2007 against the Brazilian real, which is more relevant for trade than the US dollar. For now, we will leave our year-end target unchanged

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