BofA-ML Revises FX Currency Forecast

Bank of America-Merrill Lynch has made some revisions to its year-end LatAm FX forecasts. It now estimates that the BRL will close the year at BRL2.05 per dollar. The shop, which last month thought BRL would reach BRL2.10, says Brazil’s macroeconomic fundamentals are stronger than other EM countries, which should favor the currency. It ended at BRL2.25 March 25. The CLP, says BofA-ML, should end at CLP610/USD, stronger than the previous forecast of CLP625. The shop thinks government sales of some $4bn in USD should support CLP, at least in coming months. It ended at CLP576 on March 25. The ARP, which BofA-ML believes could end the year at ARP4.0 per dollar, is likely to continue to weaken throughout the rest of 2009 as a slowing economy and a deteriorating balance of payments weigh. The shop previously thought the currency could end at ARP3.90. It closed at ARP3.69 March 25. The shop sees MXP ending at MXP13.25, Colombia at COP2,650 and the sol at PES3.25. These forecasts are unchanged. They ended March 25 at MXP14.24, COP2,353, and PES3.14.