Uruguayan fintech dLocal, the South American country's first unicorn, saw its shares plummet on Friday, after Argentine news outlet Infobae published an article saying the government was investigating it for a possible fraud of at least $400 million, Reuters reported. Citing unnamed official sources, Infobae said the Argentina government was investigating the fintech for "improper manouevers" and transfers abroad that would constitute a fraud, with most of its income coming from services sold to subsidiaries of the same firm.
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Chile’s central bank said there’s no evidence that the domestic inflation slowdown had been consolidated, even as headline consumer price and consumption readings head in the right direction, Bloomberg News reported. The only plausible monetary policy option was to keep rates unchanged at an over two-decade high of 11.25%, central bankers wrote in the minutes to their May 12 decision. The risks associated with scenarios of higher inflationary pressures were “particularly complex and costly,” they wrote.
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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.
Latin America’s top central bankers are meeting in Brazil on Friday as pressure mounts on them to begin cutting interest rates in response to slowing inflation, Bloomberg News reported. Political leaders, investors and businesses across the region that led the world into an aggressive monetary tightening campaign after the Covid-19 pandemic are now anticipating — and in some cases demanding — imminent rate reductions. That is testing the resolve of central bankers who remain hesitant to declare victory even as they appear to have gained the upper hand on consumer price increases.
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Chile’s economy picked up at the start of the year, growing at the fastest pace since the end of 2021 amid an expansion in service industries, the central bank said, Bloomberg News reported. Gross domestic product grew 0.8% in the first quarter from the prior three months and fell 0.6% from a year before. Economists surveyed by Bloomberg expected 1% expansion quarter-on-quarter and a 0.9% contraction year-on-year. Fourth-quarter growth was revised to 0.2% quarter-on-quarter from 0.1%.
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Brazil's Finance Minister Fernando Haddad emphasized on Wednesday that there is room for interest rate cuts in the country, contrasting the central bank chief's acknowledgment of ongoing challenges in achieving disinflation, Reuters reported. "My understanding that there is room for a cut cycle is no offense," he said during a hearing at the Lower House, adding that he is not questioning the central bank's power to set rates.
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