Latin America continues to slide into recession. Although the pace of decline of most economies in the region has eased, talk of recovery is premature. Indeed, exports and industrial production remain significantly below last year’s levels. In turn, the fall in economic activity has caused inflation to drop. Accordingly monetary authorities across the region continue to cut interest rates. Finally, the recent rise in global risk appetite, which we believe is likely to be short-lived, caused most local currencies to appreciate against the dollar during March and April. But in Mexico the peso fell sharply after the outbreak of the swine flu.