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2 clusters · 14 sources · 5 days · First seen · Last updated

Latin American currency volatility and dollarization

Overview

Latin American economies are experiencing significant currency volatility and varying degrees of dollarization. In Argentina, calls for full dollarization have emerged, with businessman Cristiano Rattazzi describing the peso as a ‘moneda falopa’ and ‘moneda basura’ that has depleted wealth for decades. While Argentina has seen an increase in foreign currency deposits to 28%, the broader regional trend shows a gradual decrease in dollarization, with Uruguay maintaining the highest levels.

In Mexico, the peso has faced fluctuations driven by interest rate differentials. While the currency previously experienced strength termed the ‘superpeso’—attributed by Moody’s Analytics to high liquidity and a weak U.S. dollar rather than fundamental productivity—it has also faced pressure, breaking the 18 per US dollar threshold following interest rate adjustments by the U.S. Federal Reserve.

Across the region, banking institutions face a tension between the credit growth supported by dollar-denominated deposits and the inherent exchange rate and liquidity risks associated with such practices.

Entities

Argentina · Mexico · Moody’s Analytics · Uruguay · Banco Central de la República Argentina

Timeline

  1. [BUSINESS] 2 sources
    Latin American banking faces dollarization risks and currency volatility

    Latin American banking faces risks from dollarization trends, while Moody’s Analytics attributes Mexico's strong peso to interest rates and liquidity rather than economic fundamentals.

  2. [BUSINESS] 12 sources
    Argentina and Mexico face significant currency volatility and economic shifts

    Argentine businessman Cristiano Rattazzi calls for dollarization as the peso faces criticism, while the Mexican peso weakens past 18 per dollar due to shifting US-Mexico interest rate differentials.

Sources

asiesnuestravida.com.ar · capital.pe · elceo.com · eleco.com.ar · elsiglo.com.gt · enfoquemisiones.com · eschaco.com · labandadiario.com.ar · lajornadasanluis.com.mx · massinformacion.com.mx · rionegro.com.ar · riotimesonline.com · tn.com.ar · xeu.mx