The somewhat surprising widening of Colombia’s trade deficit in May suggests that the current account deficit isn’t narrowing as we’d expected. This will keep the peso on the backfoot and the central bank in a hawkish mood, including with a 150bp hike at its meeting week. Elsewhere, the Chilean central bank’s FX sales programme has put a floor under the peso, but lower copper prices, large external imbalances and political uncertainty are likely to exert further downward pressure on the currency over the rest of the year.
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