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World's Worst-Performing Currency May Still Be Expensive: Chart

World's Worst-Performing Currency May Still Be Expensive: Chart

World's Worst-Performing Currency May Still Be Expensive: Chart

(Bloomberg) -- The world’s worst-performing currency may have even further to drop. Argentina’s real effective exchange rate -- the purchasing power adjusted for inflation -- actually rose more than 4 percent this year as inflation surpassed 20 percent. That suggests the peso may not be undervalued -- even after it lost more than 10 percent of its value relative to the dollar. For analysts at Balanz Capital Valores SA, Argentina’s largest fixed-income broker, that puts the currency on the edge of “excessive overvaluation,” and investors should hedge against a potential drop for 60 days.

--With assistance from Ignacio Olivera Doll

To contact the reporters on this story: Carolina Millan in Buenos Aires at cmillanronch@bloomberg.net, Aline Oyamada in Sao Paulo at aoyamada3@bloomberg.net.

To contact the editors responsible for this story: Rita Nazareth at rnazareth@bloomberg.net, Sophie Caronello at scaronello@bloomberg.net, Alec D.B. McCabe

©2017 Bloomberg L.P.