And the band played on...

The double zero strategy (zero primary deficit and zero growth of the monetary base) appears to be achieving financial stability, as the Peso has strengthened and interest rates have been falling.

How hopeful can we be that it will work? It seems that after a year in which the government has been playing trial and error, there is a good chance that it has finally found a strategy that can stabilize the exchange rate and bring down inflation. In the end, it went for a very orthodox approach based on both tight monetary and fiscal policies with very limited intervention in the foreign exchange market, and so far it is working.