South America

When Luiz Inacio Lula da Silva was Brazil’s leader from 2003 to 2011, he didn’t have to contend with an independent central bank, according to an analysis in The Washington Post. Reelected president in October, he has resisted the new reality created by a 2021 law enshrining the bank’s power to set monetary policy autonomously. He has called the law “nonsense” and publicly criticized the bank’s inflation goals and interest rates, creating tension with its chief, Roberto Campos Neto.

World stocks dropped on Wednesday as U.S. debt ceiling talks dragged on without resolution, stoking a general malaise in markets that saw safe-haven assets such as the dollar hold around recent highs, Reuters reported. But crude oil prices bucked the downtrend and kept rising, after a warning from the Saudi energy minister to speculators that raised the prospect of further OPEC+ output cuts. Negotiators for Democratic President Joe Biden and top congressional Republican Kevin McCarthy met again on Wednesday to end an impasse in talks.

Argentina’s government will tighten access to the foreign exchange market for oil companies that need to import amid a severe shortage of dollars, according to people with direct knowledge, Bloomberg reported. Central Bank President Miguel Pesce, Energy Secretary Flavia Royon and other officials informed oil company executives Wednesday morning that they will be required to finance import payments for 90 days. The policymakers met with executives of Raizen, Axion, YPF and Trafigura at the monetary authority to discuss the changes.

The U.S. Transportation Department (USDOT) said on Monday it fined LATAM Airlines Group SA $1 million after the airline and affiliates routinely failed to provide timely refunds to passengers for U.S. flights, Reuters reported. The department said since March 2020, it received more than 750 complaints alleging LATAM, the biggest carrier in Latin America, failed to provide timely refunds after canceling flights to or from the U.S. USDOT said it took LATAM more than 100 days to process thousands of refund requests to payment.

JPMorgan increased its corporate default rate forecast for all emerging markets to 6% from 5.5% on Monday, citing in particular growing risk among Latin American companies as access to credit markets gets tougher, Reuters reported. The bank's forecasted default rate for Latin American corporates, meanwhile, came in even higher at 6.6%, up from 5%, which if realized will be the highest default rate for the region since 2016. Analysts at the bank flagged the challenges facing Latin American issuers, including a number of potential default candidates in Brazil.