AWARDS Best bank for emerging Latin American currencies: BBVA

Emerging Latin American CurrenciesThe retrenchment of major global banks from the broader emerging markets (EM) space over the past few years allowed regional providers to step in and increase their market share. This trend continued in 2017, and Spanish bank BBVA benefited from it by further expanding into Latin America.

“We have seen an increase in clients that try to look for specialised and more regional providers versus one global provider,” says Luis Martins, global head of foreign exchange at BBVA. “What we have seen is investors and global clients increasingly interested in having a pool of strong regional providers instead of just one global provider, which was the preferred choice a few years ago.”

The key to BBVA’s success is two-fold: the presence of major banking operations in most EM countries; and the ability to connect FX activity in those regions with major distribution hubs, such as London and New York.

“We were able to link these two worlds in a very tailor-made and specialised manner to clients, so we can give them the best of being close to them in the global hubs and the expertise of [having] boots on the ground in the local markets,” Martins says. “That’s something we have seen clients increasingly value because of that extra know-how we can offer, compared with some more generic competitors.”

As a result of its efforts, BBVA was voted Best Bank for Emerging Latin American Currencies for the second consecutive year at the 2017 FX Week Best Banks Awards.

We’ve seen a huge rally at the beginning of 2017, which made the Mexican peso one of the best performing currencies among the major and EM spaces

Luis Martins, BBVA

Following a general EM devaluation in 2016, and more specifically that of LatAm currencies, overall market volume has contracted. Martins also points to a contraction of the trade balance, with imports in several countries decreasing over the last 12 months.

What has not decreased is volatility in EM currencies, which continued to be a central theme throughout 2017, with the Mexican peso standing out from the crowd. The rollercoaster ride for the peso began with the US election in 2016, with Mexico being repeatedly put on the spot by then-candidate Donald Trump and his comments about economic policy and trade.

“We’ve seen a very strong devaluation in 2016 pricing in a worst case scenario. And then we’ve seen a huge rally at the beginning of 2017, which made the Mexican peso one of the best performing currencies among the major and EM spaces,” says Martins.

“We are now approaching a period where the trade agreement and negotiations with the US are becoming more intense. The peso is on the radar of a lot of corporates in terms of decision-making because they want to understand what the trade agreements are going to be going forward,” he adds.