Most Latin American currencies rose on Wednesday as the U.S. dollar weakened after fresh economic data showed the economy was cooling and bolstered hopes the Federal Reserve would stop raising interest rates. The MSCI’s index for Latin American currencies added 0.2% as the dollar fell 0.5% after data showed slower-than-expected growth for the world’s largest economy in the second quarter as well as a smaller increase in private U.S. job growth in August.
The Brazilian real, however, shed 0.5% against the dollar. Brazil met expectations in its formal job creation for July, data showed, but the reading represented a 36.6% decline compared to the same period last year.
The IGP-M price index, which measures both producer and consumer prices, fell 0.14% in August, according to the Getulio Vargas Foundation (FGV), a think tank, compared to estimates of for a 0.15% rise. “The real has been under pressure today as the FGV IGP-M fell more than expected, suggesting that inflation pressures continue to head south in Brazil, which will allow the COPOM to continue cutting rates boldly in the near term,” said Andres Abadia, chief Latin America economist at Pantheon Macroeconomics, referring to the monetary policy committee of Brazil’s central bank.
“This is putting pressure on the potential carry trade.” Guatemalan President Alejandro Giammattei said on Tuesday the path was set for an “orderly and transparent transition” of power following the presidential election, after a new bid to suspend the winning party sowed fresh doubts.
The Argentine peso rose to 730 per dollar. The South American nation’s agriculture secretariat said on Tuesday that grain exporters can keep 25% of the foreign currency they generate in September to import soybeans, aiming to address scarcity by easing strict domestic currency controls. Mining exports from Argentina totaled 2,321 million dollars in the first seven months of the year and reached the highest level since 2012.
Mexico’s peso gained 0.1% against the dollar, while Colombia’s peso added 0.2% as higher crude prices supported the currencies of the oil exporters. Oil prices rallied after industry data showed a large draw in crude inventories in the U.S. and as a hurricane in the Gulf of Mexico kept investors on edge. Mexico’s credit rating could improve if nearshoring continues to boost its economy, the head of emerging markets credit research at S&P Global Ratings said in an interview. Nearshoring refers to the trend to move production closer to North American buyers and away from Asia.
The currencies of copper producers Chile and Peru climbed 0.2%, helped by a weaker dollar and China’s latest measures to support its crisis-ridden property sector. Chile’s unemployment rate hit 8.8% in the May-July period, government data showed, above the 8.6% expected by economists polled by Reuters. In other regional news, two-thirds of Latin American startups have laid off staff over the last 18 months, as venture capital funding fell sharply in the region, according to a report by venture capital fund Atlantico.
Elsewhere in emerging markets, Gabon’s dollar-denominated bonds fell as much as 14 cents before recovering some losses, after the military said it had seized power in the Central African nation, Tradeweb data showed. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 989.12 0.16 MSCI LatAm 2436.85 0.18 Brazil Bovespa 118071.98 -0.28 Mexico IPC 54354.95 0.17 Chile IPSA 6050.49 -0.15 Argentina MerVal 688506.10 0.719 Colombia COLCAP 1113.04 0.16 Currencies Latest Daily % change Brazil real 4.8750 -0.41 Mexico peso 16.7779 0.07 Chile peso 856 0.18 Colombia peso 4083.1 0.22 Peru sol 3.6807 -0.18 Argentina peso (interbank) 349.9500 0.01 Argentina peso. (https://finance.yahoo.com/news/emerging-markets-latin-american-currencies-152815359.html)
Original Source: Reuters
