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Investors who buy higher-yielding currencies with funds borrowed in countries with lower interest rates, the so-called carry-trade, are now favoring the Argentine peso over all other currencies.
Its 10.13 percent rate compares with 1 percent or lower in the U.S., Japan and Europe.
“Capital is returning to Argentina, pointing to a stable currency,” said analyst Nick Chamie. “Combined with the yields, it is the most attractive currency in the universe we watch.”
But researcher Guillermo Mondino believes the yields the assets offer are insufficient for the risk that the peso may tumble. The peso has lost 23 percent since 2007 and 75 percent since Argentina defaulted on its debt in 2001, the third-biggest drop in the world after the Venezuelan bolivar and Iranian rial.
