Latam Insights — Venezuela’s Maduro States De-Dollarization Is ‘Inevitable,’ Argentina Raises Interest Rates to Close to 100%
Welcome to Latam Insights, a compendium of the most relevant crypto and economic development news from Latin America during the last week. In this issue, Venezuela makes a push for de-dollarization, the Central Bank of Argentina raises interest rates to close to 100%, and Brazil breaks the U.S. dollar parity import price peg for fuel. Venezuela to Move Towards De-Dollarization Venezuelan President Nicolas Maduro stated that the country would strive to shift away from the U.S. dollar. The move is part of a global de-dollarization push promoted by several countries, including Russia and China. In his weekly program “Con Maduro+,” Maduro stated: Many alternative initiatives to the dollar are emerging in the world. We could say that we are beginning to experience a sustained accelerated process of de-dollarization of the commercial world — of world trade. Maduro also condemned the political use of the U.S. dollar, explaining that it has been leveraged as a tool to sanction countries like China, Russia, India, Iran, Turkey, Venezuela, and Cuba. Later, the Venezuelan president added to his earlier statements by declaring: The de-dollarization of world trade is inevitable, we are living it. Argentina Raises Interest Rates to Almost 100% The Central Bank of Argentina approved a 600-basis-point increase in its interest rates, taking the rate to 97% in its battle to try and contain one of the biggest inflationary processes in Argentina’s history. According to central bank authorities, this measure is part of a package that is trying to defend investment in the local currency, the Argentine peso, which has also experienced a significant devaluation against the U.S. dollar. The central bank stated: The monetary authority’s decision is based on the objective of tending towards positive real returns on investments in local currency and acting immediately to prevent financial volatility from acting as a driver of inflation expectations. The country registered an inflation rate of 108.8% year over year in April. Petrobras Breaks U.S. Dollar Parity Import Price Peg for Fuel in Brazil President Luiz Inacio Lula da Silva announced that Petrobras, the Brazilian state oil company, would break with the U.S. dollar-based import parity prices, effectively ‘Brazilianizing’ prices for fuel and diesel in the country. The measure, which was qualified by Lula as a ‘victory for the people,’ applies discounts in wholesale sales for distributors, which will pass the savings to customers at the pump, depending on their respective cost structures. Petrobras president Jean Paul Prates stated: Petrobras regains its freedom to set prices. We freed ourselves from a single and exclusive factor, which was parity. To follow all the latest developments in crypto and economy in Latin America, sign up for our Latam newsletter below. What do you think about this week’s Latam insights report? Tell us in the comment section below.