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In today's newsletters, Colombia's central bank is targeting a boost of up to $1.5 billion in international reserves to uphold its commitment to the International Monetary Fund's flexible credit line. On the commodity front, after two days of upward movement, oil prices stabilized, with Brent around $79 per barrel and West Texas Intermediate at approximately $74. Finally, a group of eight Argentine governors, predominantly from the Peronist group, have called on Javier Milei's administration to introduce compensatory actions following the recent significant fiscal adjustments.

– Matheus Zani & Daniel Porto

R&D Featured Article

Optimism Amidst Melancholy - Milei's Inauguration Shaping Argentina's Future

Our Head of FX Risk Management, Matheus Zani, shared his insights from his recent trip to Argentina. During his visit to Buenos Aires, he had the unique opportunity to witness the government transition ceremony. Engaging in conversations with the locals provided him with valuable perspectives and a deeper understanding of their sentiments as Argentina steps into this new era.

2. Oil Prices Stable Amid Red Sea Tensions and Supply Concerns

Oil prices remained steady following two consecutive days of growth, with Brent hovering close to $79 per barrel and West Texas Intermediate near $74. Concerns arise as the US and allies contemplate military actions against Iran-backed Houthi rebels in Yemen, due to increased threats to Red Sea shipping. This geopolitical tension adds to existing doubts about OPEC+ compliance with production cuts and rising non-cartel supplies, notably from the US. Since late September, oil prices have fallen nearly 20%, anticipating a surplus, despite contained regional impacts like the Israel-Hamas conflict. Daniel Hynes from ANZ Group Holdings Ltd. emphasized the Red Sea's significance for oil trade, especially for Russia-to-Asia shipments. Russia's sea-based oil exports recently increased, though weekly flows from the Baltic port of Primorsk saw a brief pause. Current futures trends for Brent and WTI suggest an oversupply situation persists into mid-next year.

3. Argentine Governors Call for Compensatory Measures Amid Fiscal Adjustments

Eight Argentine governors, mainly from the Peronist faction, have urged Javier Milei's government to implement compensatory measures in response to the announced severe fiscal adjustment. Following a meeting with leaders from all provinces, these governors expressed concerns about the new economic plan, which included a sharp devaluation of the Argentine peso without relief for workers and middle-income sectors. They argued that this devaluation immediately triggered inflationary pressures, diminishing purchasing power. The provincial leaders emphasized that measures like subsidy reductions and halting public works directly undermine provincial resources, impacting their residents. The governors suggested distributing 70% of the cheque tax revenue among provinces, a proposal supported by 22 of them. Notable signatories include governors Axel Kicillof and Sergio Ziliotto. Interior Minister Guillermo Francos stressed the need to involve provinces in this shared fiscal adjustment.

Charted Territory

What to look out for today

GBP - CPI (Nov)
EUR - Current Account (Oct)
BRL - IBC-Br Economic Activity (Oct)
BRL - Foreign Exchange Flows
USD - Crude Oil Inventories

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