Original Source (Edited with Canva).
Hello, hivers. This is the thirty-third delivery of my #latamreports series, where we review the latest political and economic developments in the region. Today we will go a little longer with the financial state, taking advantage of the closing of this week. Then we make a stop with a topic that will be even hotter in the coming days (the situation on the U.S.-Mexico border) and finish with our regional quicks, which are no less valuable for their brevity. So let me ride on top of this report now.
Finance
The last two days have been very positive for the region's finances, with national currencies such as the Mexican and Colombian reaching values against the dollar that in the case of the former had not been recorded for almost 6 years. This Friday at the close of the week, for example, the Colombian monetary authority declared that it had no intention of agreeing to new interest rate hikes, the classic resource used to control inflation, and which has the US Fed as its main thermometer on a global scale. Ricardo Bonilla, Finance Minister of Gustavo Petro's government, stated that "... the process of raising rates has ended, we hope that the path for the rest of the year will be to stabilize and lower".
The inter-annual inflation in the coffee country during the month of April was set at 12.82 %, the first time since May 2022 that it has not increased with respect to the previous month (it was 13.34 % in March), and the first time in the year that it falls below 13 % (it is necessary to go back to November 2022 to find a value below, 12.53 %). The projection is that the year will close below 10 %. In the case of the monthly variation, it was 0.78 %. This inflation data, which was not expected to be so positive, together with a more favorable position to risk in all markets, placed the Colombian peso in a favorable dynamic to close higher with +1.66% against the dollar (4,528 x 1 USD, the best 24-hour performance in two months), and overall with an aggregate rise in the week of 3.59 %. The Colombian Stock Exchange benchmark index MSCI Colcap, which groups the 25 most liquid stocks there, rose 0.48 %.
Facade of the Stock Exchange building in Bogotá (Source). Credit: Juan Camilo Alfonso Mesquida, licensed under Creative Commons Attribution-Share Alike 4.0 International license; cropped with Gimp.
On the other hand, last Thursday the Colombian Congress approved the National Development Plan until 2026, a sort of critical path with concrete goals and which also sets the financial and budgetary means for the effective growth of the country. The document deals with the most urgent issues for Colombia and, I would dare say, for a good part of the countries in the world: territorial planning based on access to water, human security and social justice, food, productive transformation, the climate problem —let us remember Petro in Spain recently—, and regional convergence (an issue that, ideological controversies aside, has not shown concrete results in a massive way for the people since the first decade of the present century, in a regional political concert dominated by the left).
The Mexican performance
We were already advancing on the good performance of the Mexican peso in the last hours, and specifically this Friday it came to trade at approximately 17.74 units per dollar, its strongest version since 2017. At the close, it stood at 17.7581 units per dollar, which implies a 0.80% improvement over the figure obtained on Thursday. The benchmark S&P/BMV IPC index, which concentrates on the 35 largest and most liquid companies in the country, advanced 0.49 % against the previous day.
The Mexican Stock Exchange (Source).
Argentina: new inflation estimate
Argentina continues to be a place full of challenges and difficulties, in the midst of an adverse political climate in the face of a too-prolonged economic crisis. This Friday, experts convened by the Central Bank of Argentina revised upwards the inflation forecasts for this year, placing it in the vicinity of just over 126%. Worst of all, the projection for the following year is even worse: if by 2023 the exchange rate should be around 398.5 Argentine pesos per dollar, by 2024 the value will be above 862 units per dollar (one of the main obstacles for the country to get out of here is to obtain better conditions in the implementation of the agreement with the IMF, a matter in which it seems to be receiving from the United States the impulse that Alberto Fernández requested from Biden).
This information was given when the Buenos Aires Stock Exchange (BCBA in Spanish) had already closed its operations, with a good result from the S&P Merval stock index, which climbed 5.46%. This index reflects the financial muscle of the 20 most liquid stocks with a presence in Bolsas y Mercados Argentinos (BYMA), an entity that constituted —with its emergence in 2017— a leap in Argentine financial management, where the BCBA operates as a shareholder since the start-up. The growth dynamics were partly due to the performance of Argentine ADRs on Wall Street, but could not be contrasted with the inflation data.
One of the buildings of the Buenos Aires Stock Exchange (Source). Credit: Antonio García. Image obtained under Creative Commons Attribution 2.0 Generic license.
| Countries | Local currency balance | Local stock index balance |
|---|---|---|
| Colombia | +1.66% | +0.48% (MSCI COLCAP) |
| México | +0.87% | +0.49% (S&P/BMV IPC) |
| Perú | +0.29% | +1.42% (S&P/BVL) |
| Argentina | -0.24% | +5.46% (S&P Merval) |
| Chile | +0.63% | +1.94% (IPSA) |
| Brazil | +0.87% | +2.91% (Bovespa) |
Daily balance of main currencies and stock indexes in Latin America ( Source).
The immigration problem at the southern border
Several U.S. cities are stretched to the limit with the resources available to deal with the unstoppable flow of migrants crossing the southern border with Mexico. In the case of New York, it was learned this Friday that several gyms in the city have been refurbished to provide temporary shelter to several individuals as the hotels that had been set up for that purpose have run out of capacity. Many immigrants arrive in the city deceived by activists who appeal to a law that requires that no one be left on the street. Mayor Eric Adams insists on the need for federal and state resources.
In the same vein, the Secretary of Homeland Security, Alejandro Mayorkas, by the way, of Cuban origin, insisted on the difficult task of the U.S. Executive to respond to the challenge of the border, with a recent increase that may even be the warning of an even greater avalanche by the time the period of effectiveness of the regulation known as Title 42, that has allowed the United States to quickly expel millions of migrants without allowing them to file their asylum cases, comes to an end. The official specifically expressed concern about the high number of Venezuelans in Border Patrol custody in Texas, representing two-thirds of the total (6,000).
The intention is for Mexico to continue to be the point of return for Venezuelan, Cuban, Haitian, and Nicaraguan immigrants who are expelled under the new policy to be implemented by the U.S. Executive. Precisely, the Chancellor of the Government of Andrés Manuel López Obrador referred on Friday to the fact that many migrants are being deceived with the possibility of better luck after May 11 and even warned against the kidnappings they are being victims of in their dangerous journey through Mexico (the authorities there were searching on Friday for 10 Colombian migrants missing since Tuesday, and of whom it was already known that they had a price of 2,500 USD per capita to be released).
Regional quicks
In spite of the poisoned diplomatic darts that are often crossed, and concrete sanctions —albeit usually aimed at specific officials— on the part of Washington, the United States is Nicaragua's main trading partner, with American products making up a third of total Nicaraguan imports, and receiving in the north approximately 61 % of the exports of the country led by Daniel Ortega (worth 5,728 million dollars, which implied an increase of 23 % with respect to 2021).
And Paraguayo Cubas, the anti-establishment Colombian far-right politician who came third in the recent elections in Paraguay, was preventively detained at the request of the Prosecutor's Office in a case where he is accused of disturbing the public peace. The candidate's followers have blocked streets and provoked other situations of tension with the authorities, echoing a narrative promoted by Cubas that there was fraud in the elections, which has not been supported by any of the organizations that participated as electoral observers, including the OAS.
Finally, in a development that is just beginning, Colombian President Gustavo Petro and the Attorney General of the Nation are increasingly at odds, with the essence of their discussion —beyond the event that originated it— on the autonomy of the Prosecutor with respect to the President. The Supreme Court has supported the argument of Francisco Barbosa, the head of the Prosecutor's Office, who has challenged Petro to dismiss him if he really believes he is his direct boss, and also announced the departure of his family for fear of the repercussions of what is happening. We will return to this issue in more detail in our next report.
And this is all for our twenty-third report. I have referenced the sources dynamically in the text, and remember you can learn how and where to follow the LATAM trail news by reading my work here. Have a nice day.
Edited with Canva.
