South America

Chile’s central bank raised its interest rate by 50 basis points, saying borrowing costs have reached the highest level of its tightening cycle and that they will remain steady to ensure inflation eases to target, Bloomberg News reported. Policymakers voted unanimously to lift borrowing costs to 11.25% late on Wednesday, as expected by most analysts in a Bloomberg survey. In a statement, board members reaffirmed their commitment “to conduct monetary policy with flexibility” to put inflation on a path to their 3% goal.
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LATAM Airlines detailed a financing plan on Wednesday that the company hopes will finalize its exit from bankruptcy in the first week of November, Reuters reported. The company filed for chapter 11 in 2020 after airline travel plummeted during the pandemic and won court approval that June. The reorganization plan would inject about $8 billion into the airline through a combination of capital increase, issue of convertible bonds and new debt.
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Argentina's inflation rate likely eased slightly in September to 6.7%, a Reuters poll of analysts showed, but remained stubbornly high overall, supporting forecasts that it could top 100% this year, the highest annual level since the early 1990s, Reuters reported. That monthly rate would be lower that a 7% price rise in August and a July peak of 7.4%. The South American country has been battling to bring down one of the world's highest inflation rates. The projections were made by 16 analysts surveyed by Reuters, with estimates ranging between 6.5% and 7%.
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An auction schedule to sell shares in Citgo Petroleum's parent company, which could force a breakup of the Venezuela-owned U.S. oil refiner, was approved by a U.S. federal judge and filed on Tuesday, Reuters reported. U.S. District Judge Leonard P. Stark's order sets bidding and sales procedures, hiring of investment banker Evercore Group and directs an approach to the U.S. Treasury Department to seek a decision on any share sale. The Treasury has protected Citgo from creditors by previously not allowing transactions.
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Venezuela’s creditors welcomed its potential rapprochement with the U.S. but still face risks and uncertainties in collecting from the South American country’s bankrupt government as its relations with Washington, D.C.'s thaw, WSJ Pro Bankruptcy reported. A rollback of U.S. sanctions on Venezuelan oil points a way to resolving the country’s huge foreign debt obligations, but offers no immediate fix for its longstanding default, according to sanctions experts and other people close to its top external creditors.
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The Biden administration is preparing to scale down sanctions on Venezuela’s authoritarian regime to allow Chevron Corp. to resume pumping oil there, paving the way for a potential reopening of U.S. and European markets to oil exports from Venezuela, the Wall Street Journal reported. In exchange for the significant sanctions relief, the government of Venezuelan President Nicolás Maduro would resume long-suspended talks with the country’s opposition to discuss conditions needed to hold free and fair presidential elections in 2024, the people said.
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Further increases to Colombia's benchmark interest rate may be necessary in the coming months as the central bank tries to bring inflation in line with its 3% target, according to minutes from the bank's meeting last week, Reuters reported. Colombia's central bank board raised its benchmark interest rate by 100 basis points to 10% last Thursday, as inflation pressures and domestic consumption remain robust and central banks around the world boost rates. The country's 12-month inflation hit 10.84% in August and the market expects the figure to have risen to 11.25% in September.
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Peru's government proposed on Friday "a new approach" for mining companies to end social gaps and avoid conflicts in the sector, a measure taken after several conflicts in the country in recent months, Reuters reported. Prime Minister Anibal Torres said during a conference between executives of large mining firms that the new "attitude" aimed to promote local and foreign investment. He added that the government of leftist President Pedro Castillo respects private initiative and wants to promote mining activity.
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The share of foreign investors in Brazilian public debt fell in August to the lowest level in more than 12 years, official data showed on Wednesday, despite high yields on government bonds, Reuters reported. According to the Treasury, the share of foreigners in domestic public debt fell to 8.84% in August, from 9.01% in July, the lowest level since December 2009. This occurred despite high yields in government bonds amid an aggressive monetary tightening to battle inflation in Latin America's largest economy.
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Venezuelan business owners struggling to get access to credit amid their country's continued economic crisis are seeking loans through foreign banks, business people and finance industry sources told Reuters. Local banks in the South American country offer few loans to the private sector because of efforts by Nicolas Maduro's government to lower inflation by increasing the supply of foreign cash, limiting the expansion of credit, reducing public spending and raising taxes.
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