HNL: Peg Looking Even Stronger

In November 2009 we argued that the Honduran monetary authorities had ample ammunition to maintain the lempira's peg to the US dollar, currently at HNL18.90/US$, and five months on their position has been reinforced by economic and political developments. The biggest risk of a near-term currency devaluation now comes from local businesses, who are pushing for an improvement in export competitiveness. While such calls are likely to continue, the government and central bank's stated resolve to protect the economy from the destabilising impact of a devaluation makes us believe the peg will hold over the short term.

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