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Dollar strength weighs on Latam FX; copper prices lift currencies of Peru, Chile

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EMERGING MARKETS-Dollar strength weighs on Latam FX; copper prices lift currencies of Peru, Chile

‘Amazonia’ bonds in 2024 seen a tough sell for some

US is reimposing oil sanctions on Venezuela, officials say

Mexican economy up 2.1% y/y in March – preliminary estimate

Latam FX down 0.2%, stocks flat

Updated at 3:30pm ET/1930 GMT

By Bansari Mayur Kamdar and Lisa Pauline Mattackal

April 18 (Reuters)A firm dollar continued to pressuremost Latin American currencies on Thursday as Federal Reserve officials emphasized few interest rate cuts are on the table this year, although strong copper prices helped Chile’s peso and Peru’s sol tobuck regional weakness.

MSCI’s index trackingLatam currencies .MILA00000CUS slipped about 0.2% while a basket of regional stocks .MILA00000PUS was flat on the day.

The currenciesof leading copper producers ChileCLP= and Peru PEN=PE were bright spots among Latin American currencies, respectively rising 1.3% and 0.6% againstthe dollar as copper prices rallied to a 22-month high.

“We think the headwinds driving the depreciation of the Chilean peso against the U.S. dollar have largely run their course,” said Ruben Gargallo Abargues, assistant economist at Capital Economics, in a note.

Emerging market currencies have wobbled this week as thedollar rose to nearly five-month highs and Treasury yields climbed, as investorsweighed strong U.S. labor market data and Fed officials’ comments that the decline in inflation may have stalled.

Higher U.S. rates typically reduce the appeal forriskier but higher-yielding emerging market assets.

“(Forex) is going through a repricing … with especially emerging market currencies seeing big downward adjustments in values versus the USD as they respond to higher U.S. yields, and risk-off sentiment globally,” said Thierry Wizman, global FX & rates strategist at Macquarie.

Brazil’s finance minister and central bank head said on Thursday that G20 economies were adjusting to changing Fed rate cut expectations and the subsequent repricing of emerging market currencies and debt.

Continuedtensions between Israel and Iran also kept investors hesitant on risk assets.

Colombia‘s peso dipped 1% <COP=> and Mexico‘s peso <MXN=> weakened past 17 per dollar ascrude prices fell on hopes of easing tensions in major producing region the Middle East.

Mexico’s economy likely grew 2.1% in March fromthe same month a year earlier, a preliminary estimate from national statistics agency INEGI showed.

Elsewhere, the Biden administration said it would not renew a licence that had broadly eased Venezuela oil sanctions.

A political push to raise the first-ever “Amazonia Bond” has intensified during talks to agree on a roadmap, yet the chance of a deal this year faces technical hurdles and scepticism among some of those tasked with managing the debt, sources told Reuters.

HIGHLIGHTS

** Turkish economy on right track , monetary policy fully functional: Finance Minister Simsek

** IMF tells Asian central banks not to follow Fed too closely

**Petrobras CEO says dividends not on agenda of next board meeting

Key Latin American stock indexes and currencies at 1930 GMT:

Latest

Daily % change

MSCI Emerging Markets .MSCIEF

1017.06

0.45

MSCI LatAm .MILA00000PUS

2386.88

-0.02

Brazil Bovespa .BVSP

123972.04

-0.16

Mexico IPC .MXX

55695.81

0.51

Chile IPSA .SPIPSA

6458.75

0.03

Argentina MerVal .MERV

1171155.88

-0.102

Colombia COLCAP .COLCAP

1328.81

-1.58

Currencies

Latest

Daily % change

Brazil real BRBY

5.2455

-0.07

Mexico peso MXN=D2

17.0531

-0.56

Chile peso CLP=CL

964.9

1.31

Colombia peso COP=

3931

-0.98

Peru sol PEN=PE

3.7167

0.59

Argentina peso (interbank) ARS=RASL

869.5000

0.00

Argentina peso (parallel) ARSB=

1005

2.49

Reporting by Bansari Mayur Kamdar in Bengaluru; editing by Barbara Lewis and Richard Chang



Read More: Dollar strength weighs on Latam FX; copper prices lift currencies of Peru, Chile

2024-04-18 19:56:47

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