Nov 12, 2019

Chile's political instability is sinking Latin American assets

Data: Investing.com; Chart: Axios Visuals

Chile's peso fell to its lowest value against the dollar on record and the country's stock market dropped to near its weakest since early 2017, as continued violence and protests have pressured the government to rewrite its constitution.

Why it matters: Chile has long been an oasis of stability in volatile Latin America and was consistently among the strongest and most market friendly democracies. But it's now mired in wide-ranging disruption and chaos and pulling down asset values in the rest of the region.

Watch this space: "The fact that the slowdown in economic activity and the fall in inflation pressures occurred prior to the protests, only increased investors' concerns and exacerbated the peso's decline," Simon Harvey, FX analyst at Monex, told Reuters.

The big picture: Latin American currencies have collectively turned lower against the dollar as recent protests in Chile and Bolivia have followed unrest in Ecuador and a surprise election result in Argentina.

  • MSCI's index of Latin American stocks has fallen over the past week — with Chile and Argentina each sliding by more than 1% on Monday — even as equity prices around the globe have risen toward record highs.

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Chile's grim economic outlook

A demonstrator throws a stone at riot police on Nov. 13, 2019. Photo: Johan Ordonez/AFP via Getty Images

The unrest in Chile could not have come at a worse time for the country's investors, who had already been facing a wave of economic uncertainty.

What's happening: The economy slowed from 4% growth last year to less than 2% in each of the first two quarters of 2019.

Go deeperArrowNov 14, 2019

South America's uprisings are about more than politics

Taking cover from a water cannon in Santiago, Chile. Photo: Marcelo Hernandez/Getty Images

Venezuela, Brazil, and more recently Ecuador, Bolivia and Chile have been in the news because of violent protests and uprisings.

The big picture: One thing's for sure — it's not because of any one political system. Venezuela has had a quasi-communist regime for almost 20 years, Chile has had a totally different pro-market approach, while Bolivia and Ecuador have had their own peculiar mixes of socialism and capitalism. But each society has gone through similar social crises in recent months.

Go deeperArrowNov 22, 2019

Trump may get the weak dollar he wants

Illustration: Sarah Grillo/Axios

The dollar has fallen every day this week, notching a cumulative loss of around 1% since President Trump complained on Twitter about its strength and took aim at two countries with weak currencies.

Why it matters: The decline may continue, reducing the dollar's strength in 2020, experts say.

Go deeperArrowDec 6, 2019