Deja Vu for Worst Emerging-Market Currency as Carry Trade Wavers
- Argentine peso drops to lowest since September on inflation
- Inflation figures highlight weakness in policy: local trader
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A slump in the Argentine peso Wednesday revived memories of last year’s collapse, after a drop in interest rates and stubbornly high inflation led investors to reverse carry trades.
The peso dropped to the lowest level since September after last week’s government data continued to spur bets that inflation will remain high. The report came as a blow to investors who had poured money into the country to profit from appealing interest rates and a stable currency. The faster-than-expected price growth threatened to undermine the peso, making the carry trade strategy less attractive.