EMERGING MARKETS – Latam currencies rally as dollar weakens, Brazilian real volatile

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By Susan Mathew and Amruta Khandekar

October 4 (Reuters)Most Latin American currencies rallied on Tuesday as the dollar weakened on falling US Treasury yields, while the Brazilian real struggled to orient after a stellar earnings-driven session Sunday’s elections.

After jumping around 5% on Monday, the Brazilian real BRBY, BRL= briefly reversed gains on the session and last rose 0.3% against the dollar.

Investors saw their political worries ease with far-right President Jair Bolsonaro trailing his left-wing rival Luiz Inacio Lula da Silva in the first-round presidential elections by a margin much smaller than polls in opinion had shown it.

“What you get with Brazil is a lot of uncertainty about who is really going to end up with the reins of power,” said Juan Perez, trade director at Monex USA in Washington.

“Bolsonaro is seen as someone who is more open on a global scale, whereas with Lula there will be more doubts about what he will bring. If Lula wins, I think it will be negative for the BRL against the dollar.”

Meanwhile, stocks in the region .MILA00000PUS joined a global rally as weak US manufacturing data prompted bets that the Federal Reserve may be forced to ease its aggressive tightening policy, pushing Treasury yields and the dollar down from recent highs. WE/XRF/

But keeping investors cautious, San Francisco Fed President Mary Daly on Tuesday said further interest rate hikes are needed and that restrictive policies must be maintained until inflation can come back down to the Fed’s 2% target.

As copper prices rose, the Chilean peso, the top producer CLP= jumped to a near two-week high as rising oil prices saw the Colombian crude exporter’s peso COP= 0.7% rally. MET/LWHERE

Minutes from the Colombian central bank meeting last week show further increases in the benchmark interest rate may prove necessary in the coming months.

Colombia raised its benchmark interest rate by 100 basis points to 10% last Thursday.

The Mexican peso MXN= earnings extended to a third consecutive session. As inflation hits its highest level in 22 years, Mexican officials on Monday announcement details of a new agreement with companies to halt rising food prices, doubling down on a collaborative effort with the private sector.

The deal allows food manufacturers and retailers to waive certain regulatory requirements, the government said.

In Argentina, the government announcement moves to boost tech exports to $10 billion in 2023 as it tries to help the central bank bolster its foreign exchange reserves.

Latin American stock indices and currencies at 6:59 p.m. GMT:

Stock indices

Last

% daily change

MSCI Emerging Markets .MSCIEF

894.92

2.14

MSCI Latam .MILA00000PUS

2235.50

1.33

BrazilBovespa .BVSP

116253.58

0.1

Mexico IPC .MXX

45966.74

1.18

Chile IPSA .SPIPSA

5248.10

2.04

Argentina MerVal .MERV

144885.83

-0.122

Colombia COLCAP .COLCAP

1194.96

3.31

Currencies

Last

% daily change

Brazilian real BRBY

5.1603

0.30

mexican peso MXN=D2

19.9540

0.33

chilean peso CLP=CL

930.9

0.97

Colombian peso COP=

4490.63

0.75

Soil of Peru PEN=PE

3.9436

0.07

Argentinian peso (interbank) ARS=RASL

148.5800

-0.23

Argentinian peso (parallel) ARSB=

278

2.16

(Reporting by Susan Mathew and Amruta Khandekar in Bengaluru; Editing by Bernadette Baum and Grant McCool)

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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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