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S. America Forex Market Report - 6 February 2015

Brasil (BRL) Statistics released by the Brazilian Institute of Geography and Statistics on the 3rd of February 2015, indicate that industrial production had fallen around 2.8% in December, and 2014 closed with a drop of 3.2% for Brazil. The biggest drop, was from Brazil’s automotive sector, which dropped 16.8% in 2014. On the other hand, the biggest increase, came from the biofuels sector, with the rise of production reaching 2.4%. The Central Bank is expecting an overall industrial growth of 0.5% for 2015. As far as the Real goes, it climbed for the first time in 5 days, as Greece announced plans to swap some of the national debt for new securities from emerging markets. To support the currency and limit import price increases, Brazil sold the equivalent of US$97.9 million of swap contracts, and rolled over contracts worth US$631.7 million on Tuesday 27/01/15.

Mexico (MXN) The Mexican peso closed the day (03/02/2015) with a sell price of 14.7225, as it strengthened against the USD for the first time in 6 weeks. This is largely due to the USD taking a dip. The Mexican Central Bank, made the decision last week to keep interest rates unchanged, at a rate of 3%.

Colombia (COP) According to the Governor of the Colombian Central Bank, projected growth has been lowered to 3.6% (the initial estimate was 4.3%). The interest rate also remains unchanged, at 4.5%. The recent fall of oil prices is not in Colombia’s favour, as it is their primary export. Should the oil prices continue on a downward trend, we can expect the COP to remain on a weakening slide against the USD.

Peru (PEN) The Peruvian Reserve Bank has announced plans to reduce the amount of loans and credit agreements given out to local businesses and the general public in USD, as they expect the USD to strengthen against the PEN. The PEN has already weakened around 2.55% against the USD in 2015. Failure to decrease the USD credit value, could cause a significant rise in inflation, and could cause great instability in the Peruvian economy. Local Economist Juan Carlos Odar, expects a worst case scenario of a 10 to 15% depreciation in the PEN/USD currency pair. This could cause havoc for households and businesses earning in PEN, with debts in USD.

Argentina (ARS) Argentina, still in a deep debt crisis, and has suffered two defaults in 13 years, will be receiving US$11 billion as part of a currency swap with their biggest trade partner (China). In addition, China is poised to invest US$4.7 billion for two hydroelectric dams in Argentina. This comes just days after Argentina’s effort to spur spending and protect borrowers from high interest rates, showed its first signs of backfiring. Banks are curbing new loans, and choking the credit to a country that is struggling to avoid recession. The Peso does not show signs of strengthening against the USD anytime soon.

Current Interbank Rates 6/2/2015:

USDARS  8.6522
USDBOB  6.9096
USDBRL  2.7457
USDCLP  624.02
USDCOP  2378.0
USDCRC  538.49

USDDOP  44.814
USDGTQ  7.6535
USDHNL  21.000
USDNIO  26.730
USDMZN  33.931
USDPYG  4773.4

*Please note these are Mid-Interbank Exchange Rates. Please contact our FX dealers for a live quote
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