We’re covering the rally of Latin American currencies after the first coronavirus shock. The struggles of planemaker Embraer. And the bold projections for Brazil’s agribusiness.
Are Latin American currencies bouncing back?
Throughout July, the main Latin American currencies have recovered some of the massive losses against the U.S. Dollar they accumulated throughout the first half of the year. The best-performing currencies in the period were the Chilean Peso (+6.68 percent in the month) and the Brazilian Real (+5.81 percent) — with the Argentinian Peso being the sole exception, falling -2.3 percent since July 1. In Argentina’s case, however, the currency crisis predates the pandemic, as the country struggles with a debt crisis — entering default territory in May for the ninth time in its history.
Why it matters. For importers, governments, and companies with debts in foreign currency, this bounceback lowers inflationary pressures. Also, a weaker U.S. Dollar stimulates capital inflow to emerging markets.
What explains the curve? “The V-shaped economic recovery that was supposed to happen in the U.S. never did and the Fed will be forced to keep rates low for even longer,” Edward Moya, an analyst at Canadian-based foreign exchange company Oanda, tells The Brazilian Report. As cases...