The immediate impact of the United States intervention in Venezuela on the main Latin American assets will be limited, although there could be episodes of greater volatility in countries with demanding valuations or high idiosyncratic risks (factors specific to the country), such as Mexico, predicted UBS Global Research, which maintained that geopolitical uncertainty could increase exchange rate volatility in a context already sensitive due to the renegotiation of the USMCA.
According to Rafael de la Fuente, Andrea Casaverde and Roque Montero, analysts at the Swiss investment bank UBS, the United States “could use the threat” of intervention in the USMCA negotiations in July of this year.
Mexico is one of the most vulnerable countries after the intervention in Venezuela.
The agreement has allowed free trade in the region for more than two decades and its most updated version, the USMCA, was promoted during President Donald Trump’s first term.
The first adjustments in global investment portfolios could also target the Mexican peso, highly overvalued against the United States dollar.
Natixis Investment Managers Solutions assured that the deterioration of oil infrastructure in Venezuela, governance risks and low profitability with crude oil prices around $50 per barrel limit the investment attractiveness for international oil companies.
Given the deteriorated state of the infrastructure, harnessing these resources would take years and require large capital, he added.