FOREX: Conquering the Market in Latin America
The market in Latin America is gradually being conquered by FOREX. Little by little, in the countries of the region, different investors are beginning to look with interest at the attractive foreign exchange market.
And not only that, but they also do their negotiations with various peers in this large market, either through local brokers or companies based in other places, but operating in the region. Let’s take a look, then, at the FOREX landscape in Latam.
A market that does not stop
Sydney opens on Sundays at 22:00 GMT; New York closes on Fridays at 21:00. Throughout this period, the Foreign Exchange market, or simply FOREX, operates without interruption.
It began to work in the nineteenth century. Initially, its purpose was to facilitate commercial operations between companies from different countries. But, nowadays, one also speculates and invests in currencies, such as securities or assets, in order to obtain a return or to back up the money.
On the other hand, it is considered that this is the market with the highest liquidity and where there is the highest volume of transactions. Between spot transactions, forwards, swaps, options and other products, an estimated $7.5 trillion USD per day, according to Compare Forex Broker. Something like 76 million USD per second. And it keeps growing.
FOREX: Conquering LATAM
As is known, FOREX trading is usually in currency pairs. And although among the main pairs, Latin American countries’ currencies do not usually appear, it does not mean that there are no movements in this market from the region.
The successive political crises, with repercussions on the economy, inflation (in some countries rather hyperinflation), as well as currency devaluation, have opened the door for foreign exchange markets in the region, as a way to look for safe-haven assets or as an investment, to generate profitability.
Therefore, the Latino investor has started to learn about this market and its various alternatives. Hence, experienced brokers, taking into account this interest, have taken advantage, proposing trading options, according to the opportunities, as well as conditions or limitations established by each country.
In Colombia, you can invest in FOREX through a broker that has an office in this nation or even one that is not located in Colombia. According to Article 7 of Law 9 of 1991 (Framework of International Changes), the holding, possession and trading of foreign exchange are free. However, according to the Bank of the Republic, there is no legal definition of the FOREX market in the country.
In addition, the Financial Superintendency clarifies that there are no FOREX platforms officially authorized by this or any other entity. Therefore, it is warned about the possible risks that can be run, and that the operations carried out are the investor’s personal decision.
Chile is the fourth GDP in Latin America and has the second-best per capita income in the south of the continent. In addition, it is considered a fairly innovative economy, with respect to technology. Despite this, it is expected that in 2023 its economy will not grow at par with the region.
With regard to FOREX, there are also local and foreign operators, although there is no interference on the part of the state in this market. Three years ago, an investigation was opened against a company for alleged fraud in derivatives, but the same was dismissed.
The foreign exchange market in Argentina is also not regulated. It can be operated by national or international brokers. However, it is appropriate to point out that, currently and for some time, there has been an exchange control in this country, which creates difficulties when buying dollars to make imports or carry out various financial operations.
In Mexico, for individuals or natural persons, the income obtained from various activities (including foreign exchange investments) generates taxes. So that by law, the developer will retain 20% of ISR (income tax). Therefore, the amount that will be taken into account will be the profit minus the withholdings.
Although in Brazil there is no express restriction with respect to FOREX, i.e. there is no law that prohibits it outright, there are certain regulations that must be respected by those who trade with currencies or even cryptocurrencies.
In this regard, it is established that companies that work with these assets must be registered as an exchange to operate; even when it comes to contracts for differences (CFDs) and other related derivatives.
Therefore, national or foreign brokers should refrain from offering currency negotiations to attract investors from the country, if they do not comply with this condition. The National Securities Commission has already restricted the activity of several companies, sanctioning, fining or suspending some.
Where is the market going
Although the circumstances, in some cases, are not entirely favorable for those who do FOREX trading, there is no doubt that this market will continue to grow and conquer Latin America.
Now, although in places where there are restrictions, organizations should refrain from making offers of negotiations, this does not prevent them from working in other areas, such as strengthening the brand’s presence or training.
The latter is considered a very important aspect, from the point of view of eventual investors, to know how to earn profitability by trading with currencies, which constitutes an alternative to obtain extra income.Also, such training should have an impact on those who regulate and establish the laws, for more knowledge on how to work in FOREX, so that they do not perceive threats, but the eventual benefits, even for the nation’s economy.