Stephen Kurczy – The Christian Science Monitor, 10/08/2013
The US government shutdown is rippling across Latin America, seesawing regional economies as markets and analysts take toll of the immediate and long-term impacts from the crisis in Washington.
Mexico and Brazil, the two largest economies in Latin America, saw their currencies swing in opposite directions last week as the US inched closer to a default. The Mexican peso fell to a month-low on concerns over weakened US demand for Mexican goods, while the Brazilian real rallied on speculation that the shutdown would prolong the US Federal Reserve’s stimulus program that has pumped cheap dollars into emerging markets.
The divergence underscores the greater reliance in Mexico on US economic growth, which is estimated to lose up to 0.4 percentage points for every week of the shutdown. Mexico sends 78 percent of all exports north of the border, while Brazil sends just 11 percent of exports to the US.