Treasury & FX in Colombia & Peru

This report on Treasury & FX in Colombia and Peru is based on an expert confidential Treasury Peer Call in which senior treasurers from Latin America, the USA and Europe shared their approaches and experiences. Although the countries are amongst the least complex from a treasury perspective in the region, there are still concerns about FX volatility due to political uncertainty.

This report (key take aways below) was compiled by Monie Lindsey based on a Treasury Peer Call chaired by Damian Glendinning.

The full report is available to subscribers in out report library.

Please contact us if you would like a sample report and to find out more about our value added services

Chair’s Overview

It is a rare pleasure to have a call on Latin America where the conclusion is that things work well, but that is the case with these two countries. This is even better news, given the turbulent pasts both countries have.

Of course, our Latin American treasurers always enjoy a lively discussion, and this session was no exception. It is still Latin America, so things will never be 100% plain sailing. 

  • Generally, funding is no problem. Extensive use is made of intercompany loans, and currency hedging is only complicated by the bouts of volatility. One participant has also encountered issues with the value dating of hedges.
  • The relationships with local banks are strong, and there is often resistance to centralising banking relationships. This usually results in a mix of local and international banks – the local banks are viewed as being necessary, anyway.
  • As this is Latin America, taxes and the bureaucracy can be onerous. In Colombia, people tend to use trustees to get round a financial transaction tax – the same tax exists in Peru, but there is no workaround. Central bank reporting in Colombia is very detailed. Again, this is all manageable – and often handled by local staff with no issues.
  • Inflation is rising in the region, and there are – mild – concerns about potential political uncertainty.

Bottom line: these are two countries which are business friendly, and where operations may require some tweaking, but still function to the satisfaction of most international treasurers. Long may this continue!

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