Still Competitive, But Time Is Running Out

July 2008 | Economic Analysis

Thanks to the rapid appreciation of the euro and the Brazilian real, the Argentine peso remains competitive, as measured using the real multilateral exchange rate. However, rising inflation is eroding this competitiveness, leaving the Argentine authorities with a dilemma - reduce inflation or weaken the exchange rate. Our core view is that the latter option will prevail and the peso will depreciate to ARS3.1500/US$ by end-2008.

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