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Analysts Note Increased Risks Of New Pension Withdrawal Approval

PERU
  • Peruvian assets traded weaker yesterday, as expected, following the news that Congress may allow for a new private pension withdrawal for individuals. USDPEN traded above 3.735, the highest since March 7, before closing at 3.7185. BBVA believe that the market impact will be contained by BCRP, which has shown a willingness to intervene, but they note that some offshores appear to be less comfortable with PEN exposure. For now, BBVA prefer to be long USDPEN, with support confirmed at 3.68, and they would feel more comfortable with levels of closer to 3.80.
  • Meanwhile, JP Morgan believe that the chances of the pension withdrawal being approved have risen significantly, given the clear majority of the Economy Commission that voted in favour of it (17 to 3 in favour). They are currently neutral FX and rates, noting that while bond valuations seem appealing, the potential that this bill is approved is concerning enough to keep them on the sidelines.
  • Datawise, the calendar is empty for the rest of this week, with Lima March CPI inflation the next key release on Monday, ahead of the April 11 BCRP monetary policy meeting.

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