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.
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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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Argentina's government is bolstering its economic defenses as it battles runaway inflation that hit 109% in April, fast draining central bank foreign currency reserves, a weakening peso and simmering market fears of a sharp-shock devaluation, Reuters reported. The economy ministry announced a package of measures on Sunday including new interest rate hikes, more central bank intervention in currency markets and fast-tracked deals with creditors after inflation overshot all forecasts last week. An official source told Reuters the rate hike would be 600 basis points, bringing the rate up to 97%.
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Argentina will unveil a set of emergency measures in a bid to stem additional currency losses, including a large increase to its key interest rate, as inflation spirals out of control in the run up to presidential elections, according to officials at the Economy Ministry and the central bank, Bloomberg News reported. The monetary authority will raise its benchmark rate by 600 basis points to 97% on Monday while boosting intervention in the foreign exchange market, the officials said, asking not to be named before measures are formally announced by Economy Minister Sergio Massa.
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Brazil’s central bank chief said high levels of public debt are to blame for interest rates steady at a six-year high, countering President Luiz Inacio Lula da Silva’s criticism of monetary policy and appeals for a rate cut, Bloomberg News reported. If government debt were low, “the cost of money would be cheaper for everyone,” Roberto Campos Neto said during a TV interview with Brazil’s CNN. Campos Neto said it’s not the central bank’s fault when the government issues a bond and pays yields of 6% above inflation, like Brazil did recently.
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Rio de Janeiro’s electric utility filed for protection from creditors after warning that it was struggling to pay its debts without government authorization to increase tariffs, Bloomberg News reported. Its bonds and shares sank. Light SA, as the holding company for Light is called, filed a request for protection from creditors of 11 billion reais ($2.23 billion) to a Rio de Janeiro court on Friday, according to a regulatory filing.
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