Peso Underpinned By Fundamentals

June 2008 | Economic Analysis

The central bank's new capital controls have not prevented the Uruguayan peso from reaching multi-year highs of UYU19.35/US$. Driven largely by high global commodity prices, we see further room for peso appreciation in the medium term. Moreover, higher minimum reserve requirements have also failed to reduce inflationary concerns. We forecast year-end inflation of 7.8%.

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