Still, devaluation is taking a toll in dollar terms on luxury retailers who sell in local currencies in the region, said Christian Konrad, managing director for Latin America, Caribbean and travel retail for Bulgari.
This suggests that although sentiment towards these countries is negative, namely because they are commodity producers exposed to China and that has been translating into negative equity performance, for the currency to be depreciating at a much stronger pace, other factors may also be in place.
Image courtesy of http: Latin America remains particularly vulnerable to a stronger-than-expected slowdown in China—the destination for 15 percent to 25 percent of exports from Brazil, Chile, Peru, Uruguay, and Venezuela—and to further declines in commodity prices, the report said.
Confidence is in the doldrums and tighter monetary conditions are bound to bruise spending and investment this quarter. In light of a strong USD, low commodity prices and moderate acceleration of wages, it will be hard to trigger an effect similar to the one experienced throughout and potential for substantial USD appreciation is limited, if any.
While each country must adopt its own distinctive monetary and fiscal policies, analysts point to some key considerations.
In order to be less reliant on inconsistent neighbors and fluctuating economic policies, Latin America should focus internally on sustainable reform. The biggest decision of course, was to let the official exchange rate go with the market and then the possibility to again buy dollars, at least for imports, exports and personal savings.
Telefonica, BBVA and Santander  all saw drops in the prices of their shares because of the exposure they have to Argentine assets.
Once known as the barn of the world, Argentina was right where it belonged. The share for Brazilian shoppers fell into single digits, said Eduardo Coello, group country manager for the Latin America and Caribbean region at Visa International.
I am not receiving compensation for it other than from Seeking Alpha. And despite high income levels in the U. The forecast was revised up 0. Argentina and Venezuela face output contractions of about 1 percent and 8 percent inrespectively.
However, growth was uneven across countries and activity in the more vulnerable economies of Argentina and Brazil floundered. The current exchange rates make me wonder if Latin American currencies are peaking. Among these currencies the BRL may appear very attractive given the strong depreciation experienced inbut political noise in Brazil, may limit a more pronounced appreciation.
Pass-through from a weak peso caused inflation to spike in Argentina, while Brazil also saw higher price pressures due to electricity price hikes, a weak real, and higher gas prices. Meanwhile, there is much uncertainty about how far China will carry its new policy.
Amid the hobbling of activity and the worsening of the crisis, the economy has likely entered recession and a majority of FocusEconomics Consensus Forecast analysts now see the economy contracting this year. A further deterioration of the situation in Brazil could lead to a sudden repricing of regional assets, reduced demand for exports among trading partners in the region, and an increase in perceived risk.
A market-friendly outcome to the election remains crucial to ensuring a sustainable recovery. For the currencies of Latin America, had already been a difficult year.Still, devaluation is taking a toll in dollar terms on luxury retailers who sell in local currencies in the region, said Christian Konrad, managing director for Latin America, Caribbean and travel retail for Bulgari.
Feb 21, · The Effects of Argentina's Currency Devaluation in Latin America extend beyond just their political borders, and could substantially impact the future regional growth. For the past four years, the Argentine economy has been shaken by a string of decisions from a government that once enjoyed full approval and an economic.
Huseyin Kalyoncu et al. • Devaluation and trade balance in Latin American countries Zb. rad.
Ekon. fak. Rij. • • vol. 27 • sv. 1 • 1 5.
The devaluation of the Latin American currencies can be traced to Argentina Published: May 22, The first week of May brought a strong devaluation of the main South American currencies, the volatility of the Argentine economy could be the trigger.
According to Gary Clyde Hufbauer, senior fellow at the Peterson Institute for International Economics, “the whole economy of Latin America is in a very discouraging position. What Latin America really wants is a boom in China, and.
At fiscal level, things are in a better shape, although in terms of primary budget balance, Brazil still compares favorably to its Latin America peers.
With low commodity prices, most of the current account balances in Latin America are in deficit, something a weak currency should contribute to soften or even revert.Download