Rebound in Argentine peso unlikely to be sustained

The recent strength of the Argentine peso, which has been the best-performing currency in Latin America so far this month, has led some to suggest that the worst is over for the currency. However, the peso still looks overvalued to us and we expect it to weaken against the dollar over the coming years. Along with most other financial markets across the region, which have had a good month so far, the Argentine peso has appreciated by almost 3.5% against the dollar. The bigger picture, though, is that the currency is still down by close to 50% against the dollar over the past 18 months. That’s largely thanks to the devaluation in December 2015.