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Solid dollar hits Latin American currencies

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Author of the article:

Reuters

Anisha Sircar and Bansari Mayur Kamdar

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A firmer dollar weighed on most Latinos

US currency on Wednesday, with Brazil’s real leader

losses as the Chilean peso rose even as GDP data rose

fears that the country is heading for a recession.

Federal Reserve Chair Jerome Powell said on Tuesday that the U.S

central bank would drive interest rates as high as necessary

contain inflation, including raising rates above neutral.

That boosted the dollar, which strengthened 0.3% to 103.6,

while US Treasury yields rose, putting pressure on riskier assets.

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Brazil’s real led losses, fell 1.1% while

Mexico’s peso, Colombia’s peso and Peru’s sol

decreased between 0.1% and 1%.

The Bank of Mexico must have a “robust focus” on

monetary decisions amid global uncertainty, an auxiliary bank

said governor in a podcast. The director of Brazil’s central bank said:

though he hoped the country’s rate-raising cycle was nearing its end

end, that would still depend on data.

Chile’s peso fell 0.3%, looking past the central bank

data showed the economy grew by 7.2% in the first quarter

from 2022 from a year earlier, lower than a projected jump of 7.9%, based on

in a Reuters poll.

“There is a growing chance of a recession this year,” he said

Nikhil Sanghani, Emerging Markets Economist at Capital

Economy.

Seasonally adjusted GDP shrank by 0.8% in the

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quarter of the previous three months, the data showed,

raising fears that Chile is heading for a recession.

“After a stormy recovery in 2021, it seemed unlikely

that Chile’s economy would defy gravity this year, but the 0.8%

q/q contraction in Q1 was greater than we and the Refinitiv

consensus,” Sanghani said.

Latam shares reversed early gains of 0.5% to

slip 2.5%, dragged by a 2.4% slide in the Brazilian Bovespa.

Stocks have changed little this month despite a 13.8% decline in

April as risk appetite dwindles amid fears of the cloudy outlook

for global growth amid rising inflation.

The region could underperform other emerging markets

forward from a growth and inflation perspective, even if

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commodity prices are rising, McKenna said.

Elsewhere, South Africa’s fringe fell 1% after retail sales

sales increased by 1.3% year-on-year in March,

slightly below expectations of 1.5%.

Pakistan opened long-delayed talks with the International

Monetary Fund, seeking the release of more money from a $6

billion rescue package agreed in 2019.

Sri Lankan stocks ended 0.5% lower during worst

economic crisis. The energy minister said the country was on the run

no more money to pay for fuel.

Latin American Stock Indices and Currency at 2000 GMT:

Stock Indices Latest Daily %

Modify

MSCI Emerging Markets 1030.39 -0.04

MSCI LatAm 2280.35 -2.47

Brazil Bovespa 106137.08 -2.44

Mexico IPC 50341.58 -2.18

Chile IPSA 4986.76 -0.73

Argentina MerVal 90803.43 0.932

Colombia COLCAP 1465.19 -2.73

Currency Last Daily %

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Brazil real 4.9812 -0.05

Mexican Peso 20.0310 -0.50

Chile Peso 853.7 -0.42

Colombian Peso 4065.91 -1.04

Peru Sol 3.77 -0.24

Argentine Peso (Interbank) – –

Argentine peso (parallel) – –

(Reporting by Anisha Sircar and Shreyashi Sanyal in Bengaluru;

Editing by Alison Williams and Grant McCool)

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