The dramatic improvement in Argentina’s trade balance has helped the central bank to rebuild its FX reserves, but this has only been made possible because domestic demand has collapsed. A weaker currency will be needed to prevent the trade balance returning to deficit when the economy recovers. Elsewhere, communications from Chile’s central bank support our view that it will be the one country in the region where interest rates return close to neutral this year. Finally, Mexico’s election race enters the final straight next week. All our research on the vote can be found on our dedicated webpage and we are also holding an online briefing on 3rd June. Sign up here.
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