Mizuho Expect USD/ARS To Rise To 150 By Year-End

Mizuho on Argentina:

• Argentina’s consumer prices rose 3.9% M/m in January, keeping annual inflation above 50% for an eighth consecutive month (50.7%). Mizuho expect inflation to accelerate to 55% this year.
• Depleted net reserves means that the central bank is running out of ammunition to keep the official exchange rate artificially strong and so the currency is likely to experience a faster depreciation this year. Indeed, the government has allowed the pace of depreciation of the peso to more than double to 2.2% per month. But the gap between the parallel rate and the official exchange rate still remains wide at 100%.
• Mizuho forecast the currency will end the year at 150 per dollar, representing a 46% fall from last year’s close.