Best Bank Awards: Banco Santander

With trade tensions deteriorating and the investor mood on the US economy holding better than the rest of the world, the dollar has strengthened over the past year, according to Banco Santander.

“The impact on Latin American currencies has been evident, with many currencies suffering since the turn of the year, with the Mexican peso being the big exception. The Chilean peso was particularly hit given Chile’s open economy, and dependence on copper exports and China,” says Andrew Brown, global head of foreign exchange at Santander Global Corporate Banking.

He expects a correction in the global dollar cycle, reflecting the easing of the federal funds rate, which should be neutral-positive for Latin American currencies, while growth in China will be another important factor given its impact on commodity prices.

“Idiosyncratic elements are everywhere across the region, so we’ll likely have divergence in performance, especially if growth dynamics differ much,” he says.

In terms of stories unfolding over the next few months, the Argentine peso will likely be under pressure in the bank’s view, while in Brazil, inflows from the oil-privatisation process will be a theme entering 2020. In Chile, civil unrest means the Chilean peso is likely to trade more in line with local events.

Falling interest rates in Mexico will be a development to watch out for in MXN. Meanwhile, Colombia’s resilience in terms of growth should help COP to revert its current depreciation trend.

Banco Santander, which was voted Best bank for emerging Latin American currencies at the 2019 FX Week Best Bank Awards, is looking back on a strong year for its business and says it has made progress in trying to ensure the assets of the group are more readily available to those who want to use them.

Looking at future trends for foreign exchange volumes over the next one to three years, Brown notes the latest Bank for International Settlements survey indicates FX volumes grew by 30% to $6.6 trillion per day between 2016 and 2019.

“I am sure the trend will continue, albeit at perhaps a decreasing rate. One thing, I think, is very clear: the relevance of what are currently considered emerging markets can only increase going forward,” he says. Accordingly, Banco Santander’s strategy remains “Latam-led and customer-focused”.

However, Brown says the firm will continue working on its products for all clients, seeking to improve its entire offering, including comprehensive capabilities in Europe and Asia.

The full list of winners of the 2019 FX Week Best Banks Awards