Peruvian Sol Will Average Weaker As Short-Term Growth Outlook Worsens

• It is expected that the Peruvian sol (PEN) will trade sideways in the coming months as a deep global recession and low copper prices cap the upside from improving investor risk sentiment.
• In the longer term, the expectation is that the unit will return to a more modest rate of depreciation against the US dollar as a minimal real interest rate differential with the US and relatively expensive valuation offset higher copper prices and capital inflows.
• Fitch revised its 2020 average forecast to PEN3.44/USD, from PEN3.40/USD previously, and its end-2020 FX forecast to PEN3.45/USD, from PEN3.40/USD, implying the sol will hold its value after depreciating 4.1% in the year to date. 

 (Source: Fitch)