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15 Apr 2015
Latam FX points to range trading – Scotiabank
FXStreet (Edinburgh) - Eduardo Suarez, Chief FX Strategist at Scotiabank, sees the LATAM currencies trading within recent ranges.
Key Quotes
“LATAM FX has stabilized into range trading, similar to the trend we have seen in major FX, as expectations for the Fed’s lift off seem to be in the process of re‐evaluation”.
“To some degree, the exception within LATAM appears to be PEN, which continues to need strong intervention from the BCRP to stabilize it”.
“Part of the reason for this could be “pent up depreciation”, due to the slower adjustment that the central bank orchestrated in order to smooth the adjustment for a still highly dollarized financial system”.
“A positive factor for PEN down the line, could be the high dollarization of the domestic pension system, which we expect to at some point reverse”.
Key Quotes
“LATAM FX has stabilized into range trading, similar to the trend we have seen in major FX, as expectations for the Fed’s lift off seem to be in the process of re‐evaluation”.
“To some degree, the exception within LATAM appears to be PEN, which continues to need strong intervention from the BCRP to stabilize it”.
“Part of the reason for this could be “pent up depreciation”, due to the slower adjustment that the central bank orchestrated in order to smooth the adjustment for a still highly dollarized financial system”.
“A positive factor for PEN down the line, could be the high dollarization of the domestic pension system, which we expect to at some point reverse”.