LatAm FX Outlook Improves: Morgan Stanley

Morgan Stanley has made an upward revision to its forecasts for several LatAm currencies as the gloomy outlook for region-wide economic performance becomes less severe. Colombia’s peso could finish 2009 at COP2,050 per dollar, says the shop. That’s stronger than a previous estimate of COP2,300. Analysts also changed their 2010 forecast to COP1,950, from COP2,400. “While we still expect the [economic growth] recovery to be below trend, we see room for gains on the currency front as better growth, improved terms of trade and a correction of the overshoot at the turn of the year should push the Colombian peso to appreciate in the months ahead.” Morgan Stanley also now believes the ARP will end 2009 at ARP4.20 per USD, up from ARP4.80. In 2010, Argentina’s currency will close at ARP4.70, up from ARP5.50, predicts the shop. The BRL should end 2009 at 2.10, up from a previous estimate of BRL2.50, and in 2010 should end at BRL1.90, instead of its previous estimate of BRL2.60. The PES is now seen ending 2009 at PES3.20, up from PES3.45 and in 2010 should reach PES2.90, up from PES3.60