Welcome to Latam Insights, a compendium of the most relevant cryptocurrency and economic development news from Latin America during the past week. In this issue, Venezuela makes a push for de-dollarization, the Monetary Authority of Argentina raises interest prices to next to 100%, and Brazil breaks the United States dollar parity import price peg for fuel.
Venezuela to Move Towards De-Dollarization
Venezuelan President Nicolas Maduro indicated that the country would strive to shift away from the United States dollar. The move is part of a worldwide de-dollarization push promoted by plenty of countries, including Russia and China. In his weekly program “Con Maduro+,” Maduro stated:
Numerous alternative initiatives to the United States 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 likewise condemned the political use of the United States dollar, explaining that it has been leveraged as a tool to sanction countries like China, Russia, India, Iran, Turkey, Venezuela, and Cuba. Thereafter, 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 Prices to Almost 100%
The Monetary Authority of Argentina approved a 600-basis-point boost in its interest prices, taking the price to 97 percent in its battle to try and contain one of the largest inflationary processes in Argentina’s history. Reports by monetary authority authorities, this measure is part of a package that is attempting to defend financing in the local currency, the Argentine peso, which has likewise experienced a whole lot of devaluation against the United States dollar.
The monetary authority stated:
The monetary authority’s decision is according to the objective of tending towards positive real returns on assets in local currency and acting instantly to prevent financial volatility from acting as a driver of inflation expectations.
The country registered an inflation price of 108.8 percent year over year in April.
Petrobras Breaks United States 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 United States 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.
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