The unstoppable dollar in Latin America, with historical highs in Chile and Colombia

RIO DE JANEIRO, BRAZIL – The dollar today continued its unstoppable rise in Latin America and this Wednesday it reached record highs in Chile and Colombia, in the midst of a world scenario marked by nervousness over a possible recession in the United States and adverse political and economic situations in some countries of the region.

The U.S. currency was quoted around noon at CLP$1,000 (Chilean pesos) and closed the day at CLP$965, a new historical maximum in the midst of a global strengthening of the currency and before the decline in the value of copper, the country’s main export.

The U.S. currency fluctuated between CLP$954 and CLP$1,000, according to local operators, and grew 1.36% compared to the previous day, when it closed at CLP$953 per dollar.

POLITICAL UNCERTAINTY HITTING, ACCORDING TO BORIC

The Chilean president, Gabriel Boric, blamed the increase on external factors but also on the “uncertainty” generated by a possible change in the constitutional norm, since the Magna Carta project, which was elaborated during a year by the Constitutional Convention, was presented publicly yesterday and will be voted in a plebiscite on September 4.

“(The appreciation of the dollar) is tremendously worrying. There are different causes: the drop in the price of copper, on the one hand (…) Now, there are also internal factors and uncertainty, without a doubt, that contributes to this,” Boric considered.

“It is important that the different political actors give signs of certainty,” added the Chilean president on the same day that the electoral campaign for the plebiscite began.

For his part, the Minister of Finance, Mario Marcel, tried to reassure the market by stating that “the factors that in the past made Chile especially vulnerable to the exchange rate are no longer there today.”

DOLLAR, MORE THAN 4,300 PESOS IN COLOMBIA

Colombia also registered today the arrival of the dollar at the highest rate in its history, of COL$4,353, after two weeks surpassing COL$4,000, according to monitoring by the Central Bank of the Republic.

The representative rate of the current market, according to the Banco de la República, was COL$4,259.86, while in some exchange houses it was sold unprecedentedly below the market value, at between COL$4,140 and COL$4,170 per dollar.

The U.S. currency began to rise sharply on June 21, the day the markets opened after the second round of the presidential elections, in which the winner was the leftist candidate, Gustavo Petro.

According to the central bank, the devaluation of the Colombian peso so far this year is 7%, while in the last twelve months, the currency has lost 12.78% of its value.

ARGENTINA AND ITS HARSH RESTRICTIONS

In Argentina, the continuous devaluation of the peso against the dollar and the shortage of international reserves that the Central Bank has been dragging on for almost three years has maintained harsh restrictions and taxes on the sale of dollars in the official market.

This means that individuals and companies must resort to alternative channels such as the so-called “financial dollars” or the “black market”, where the parallel dollar, also called “blue”, is sold.

That is why in the controlled official price, the dollar has appreciated 1.34% since last Friday -from $130.25 per dollar to $132 this Wednesday-, while in the parallel market, the US currency went from be sold at $239 last Friday to $280 this Monday, to drop to $250 today Wednesday, that is, a final appreciation in three days of 4.60%.

In addition to the usual distrust of the Argentine peso, the rise in the dollar in recent days is also motivated by the effect that the worsening of the internal political crisis suffered by the Government has had on the markets, after last Saturday the minister of Economy, Martín Guzmán, resigned in the midst of strong divisions in the ruling party.

FIFTH DAY OF DEVALUATION OF THE MEXICAN PESO

On the other hand, the Mexican peso closed this Wednesday at Mex$20.69 per dollar, according to official data from the Bank of Mexico (Banxico), which implies its fifth consecutive day of depreciation and its worst level since March.

The data supposes a weekly depreciation of the Mexican currency of 2.83%, compared to the record of the previous Wednesday -when the exchange rate closed at Mex$20.12-, in addition to a daily loss of 0.53% compared to Tuesday, when was quoted at Mex$20.58.

“The growing volatility of the exchange rate and concerns about a possible recession may take the exchange rate to the level of Mex$21 per dollar in the short term,” said Gabriela Siller, director of economic analysis at Banco Base.

In any case, the Mexican peso is still far from its worst level so far this year. when on March 8 it was exchanged at Mex$21.38 per dollar, in contrast to its best level on May 30, when it marked a price of Mex$19.5 per dollar, according to Banxico.

PERU AND BRAZIL ARE NO EXCEPTION

In Peru, the exchange rate closed today at S/.3.89 (sol), the highest price of the year since last January, which represents a rise in the price of the dollar of 0.90% compared to Tuesday, according to the Central Reserve Bank of Peru (BCRP).

However, the price of the sol per dollar has fallen by 1.62% in the last twelve months and by 2.41% so far in 2022, according to the issuing entity, since it has not returned to exceed S/.4 per dollar that marked last year after the election of the leftist candidate for the Presidency, Pedro Castillo.

Meanwhile, in Brazil, the dollar has strengthened in recent days, after falling 6.2% in the first half of the year, amid increased concern about the direction of the country’s fiscal accounts and the growing risk of a global recession.

The greenback appreciated 0.60% against the real on Wednesday and was trading at R$5.421 (real) for both purchase and sale at the commercial exchange rate, the highest level since January. In the last week, the US currency has already accumulated a rise of 3.6%.