In the News

EMERGING MARKETS-Latam FX slips, Chile’s peso off on lithium nationalization plans

NEW YORK, APRIL 21 (Reuters) - Currencies in Latin America were on track for their worst weekly performance in nearly a month against a strengthening dollar, while the Chilean peso slid after the Andean country unveiled plans to nationalize its lithium industry.

  • Chile plans to nationalize its vast lithium industry
  • Mexican corporate debt issues surge in Q1, seen slowing
  • Brazil’s Campos Neto: Central bank independence crucial
  • ECLAC: Latin American, Caribbean economies to grow 1.2%
  • Latam FX off 0.1%, set for worst week since March

The MSCI’s index for Latam currencies was down 0.1% by 1415 GMT, while regional stocks fell 0.7%.

The peso slipped 0.5% against the dollar after Chile’s President Gabriel Boric said on Thursday he would nationalize the lithium industry to boost the South American
country’s economy and protect its environment.

“It puts the focus on Latam possibilities for entering not just the mineral game, but also the tech game as the availability of local raw materials can lead to companies
establishing manufacturing of EV and other related energy as well as transportation tech,” said Juan Perez, director of trading at Monex.

“We feel this makes for long-term growth for their economy, a boost for the Chilean peso and ultimately an advantage for the hemisphere as a whole.”

Chilean stocks, however, shed 1.8%. The currencies of oil exporters Mexico and Colombia edged up 0.1% against the greenback. Corporate bond issues in Mexico surged in the first quarter, fueled by the post-pandemic recovery of economic activity, the country’s main stock exchange said on Thursday.

Brazilian markets were closed on Friday for a national holiday, a day after the real currency posted its worst weekly performance in more than five months.

Central bank Governor Roberto Campos Neto said the bank’s independence is crucial for the country’s economy, as political pressure mounted for it to reduce borrowing costs.

Peru’s sol gained 0.3% and was on track to outperform its regional peers this week.

Overall, economies in Latin America and the Caribbean are expected to post a combined growth of 1.2% in 2023, the United Nations economic commission for the region (ECLAC) said, a slight reduction from its previous forecast of 1.3%.

Elsewhere in emerging markets, Egypt’s dollar-denominated government notes extended losses, with the issue maturing in 2024 off 0.8 cents and hovering near a record low, Tradeweb data showed.

“Dollar bonds are under pressure, and until reforms are implemented and Egypt receives USD disbursements from the IMF and regional countries, I would expect Egypt’s sovereign debt to trade at distressed or stressed levels,” said Brendan McKenna, international economist and FX strategist at Wells Fargo.

Zambia’s official creditors are close to signing a memorandum of understanding on debt relief, Finance Minister Situmbeko Musokotwane said.


Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Paul Simao
Let’s Talk
Ready to save money, save time, and reduce risk?

It’s quick and easy to get started. Fill out the form below and a Monex USA market expert will connect with you shortly. Our team will work closely with you to develop a personalized strategy for your global payment & currency needs.

Contact us