Argentina Peso And Colombia Politics Updates
Argentine Peso Set For Faster Depreciation Rather Than Devaluation
We expect that the Argentine government will continue to allow the peso to weaken over the coming months, and believe the unit will depreciate from its current spot rate of ARS5.698/US$ to ARS5.820/US$ within the next several weeks. Fundamental imbalances remain in the external account that will force continued weakening of the unit, but we anticipate that the Argentine government, which has closely managed the unit's crawling peg for years, will do what is necessary to prevent any major currency moves in advance of the October 2013 mid-term election. We believe this will mean relatively faster depreciation in crawling peg in the second half of this year than was the case in the H1 2013.
Colombia: President Santos' Uphill Battle For Re-Election In 2014
We are growing increasingly sceptical that Colombian President Juan Manuel Santos will be able to secure re-election in May 2014. While a recent agreement with miners to end a strike bodes well for Santos' electoral prospects, social tensions remain elevated following two deaths related to country-wide protests, and we do not rule out further outbreaks of violence in the near term. In addition, we continue to believe that Santos' electoral bid will depend heavily on the success of the ongoing peace negotiations with left-wing insurgent group, Fuerzas Armadas Revolucionarias de Colombia (FARC), which have not yet shown tangible progress on the proposed agenda or in reducing violence. While the opposition presidential candidates have not been confirmed yet, we believe Santos' main challenger will come from the new Centro Democrático political movement, founded by former President Álvaro Uribe, a fierce critic of the peace negotiations with the FARC.
Both of the above developments are covered in greater depth in Business Monitor Online.
This Week's Trivia Question
Last week, our question was as follows: In light of the anticipated US attack on Syria, when did Syria actually participate in a war on the same side as the US? The answer is the 1991 Gulf War to expel Iraqi forces from Kuwait. In that conflict, Syria was the sixth-biggest troop contributor to the US-led coalition, after the US, Saudi Arabia, Britain, Egypt, and France.
This week's question is as follows: According to the Bank for International Settlements (BIS), the Chinese yuan has now entered the ranks of the world's top 10 most traded currencies, in ninth place. The top three are the US dollar, euro, and yen. What are the other six currencies in the top 10 (in any order)? We will reveal the answer in next Friday's blog post.