EMERGING MARKETS – Latam FX Rises as Dollar Falls; Fall of the Chilean peso

By Shreyashi Sanyal

August 29 (Reuters)Latin American currencies posted gains on Monday as the dollar retreated after hitting a new 20-year high amid expectations of higher U.S. interest rates, while the Chilean peso fell then copper prices were falling.

The MSCI Latin American Currency Index .MILA00000CUS edged up 0.3% as the dollar =USD plunged against a basket of currencies. XRF/

The true of Brazil BRBY= increased by 0.4%. Investors watched Brazil’s top presidential candidates square off in the first presidential debate on Sunday ahead of October’s elections in Latin America’s biggest economy.

Separately, Brazil added 218,902 formal jobs in July as the labor market continued its post-pandemic recovery, according to government data. Although the net gain was less than the 260,000 jobs expected by economists in a Reuters poll, it was the seventh straight month of job growth.

The Mexican peso MXN= and the Colombian peso COP= increased by 0.3% and 0.2% respectively.

Gains were limited, however, by expectations that U.S. interest rates will stay higher for longer than markets had expected after Federal Reserve Chairman Jerome Powell’s hawkish speech Friday at the Jackson Hole economic symposium in the United States. United States.

Rising interest rates in developed countries make emerging market assets less attractive as central banks in developing countries reach a later stage in their monetary tightening cycles.

“It’s a first to say that President Powell’s comments in Jackson Hole must have been yet another reality check for investors who were hoping the Fed was going to pivot and could start cutting interest rates as soon as possible. middle of next year,” said Piotr Matys, senior FX analyst at In Touch Capital Markets.

“The prospect of higher interest rates and staying at relatively high levels for an extended period in the US does not bode well for risky assets…especially for emerging currencies.”

The currency of the world’s largest copper producer, Chile CLP= lost 0.5% as prices for the red metal fell on fears of slowing economic growth and demand for the metals. MET/L

Investors were also gearing up for a vote within a week in Chile to decide on a draft constitution, written by mostly independent and progressive elected voters, that promises sweeping changes to the Andean country’s institutions.

Main stock indices and currencies in Latin America at 14:26 GMT:

Stock indices

Last

% daily change

MSCI Emerging Markets .MSCIEF

993.82

-1.26

MSCI Latam .MILA00000PUS

2236.38

0.33

BrazilBovespa .BVSP

112373.97

0.07

Mexico IPC .MXX

46767.20

-1.07

Chile IPSA .SPIPSA

5492.01

0.54

Argentina MerVal .MERV

141718.47

0.183

Colombia COLCAP .COLCAP

1294.85

-0.31

Currencies

Last

% daily change

Brazilian real BRBY

5.0580

0.38

mexican peso MXN=D2

19.9782

0.18

chilean peso CLP=CL

892.7

-0.17

Colombian peso COP=

4388.25

0.13

Soil of Peru PEN=PE

3.8298

-0.26

Argentinian peso (interbank) ARS=RASL

138.2800

-0.41

Argentinian peso (parallel) ARSB=

288

1.39

(Reporting by Shreyashi Sanyal and Ankika Biswas in Bengaluru; Editing by Paul Simao)

((Shreyashi.Sanyal@thomsonreuters.com; +1 646 223 8780; +91 961 144 3740; Twitter: https://twitter.com/s_shreyashi;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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