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Actionable news in BBVA: BANCO BILBAO VIZCAYA ARGENTARIA S.A.,

A Record Low Argentine Peso Is No Obstacle to Carry-Trade Bulls

  • High interest rates are seen overcoming currency weakness
  • BTG sees risk that October vote could send peso tumbling

Argentina’s peso is hovering near record lows, but carry-trade investors aren’t worried.

Taking advantage of some of the world’s highest interest rates, investors who borrow in dollars to buy local assets are finding there’s money to be made even as the peso drops and analysts call for further declines. BBVA Securities Inc. predicts dollar returns of 6.5 percent this year from Argentina’s fixed-rate local paper even with a weaker peso.

"Argentina’s carry is so high it compensates for peso depreciation in the months ahead," said Alvaro Vivanco, the head of Latin America strategy for BBVA, who recommends fixed-rate local bonds known as Botes due in 2021 and 2023. He says interest rates will stay elevated as the central bank focuses on damping inflation expectations.

The currency...


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