The Latin American currencies and stocks fell in value this Tuesday, in particular the Brazilian real and the Mexican peso, swept away by global risk aversionin the face of growing concerns about the conflict between Israel and Iranas well as the fading of expectations of a prompt reduction in interest rates in the United States.
The vice president of the Federal Reserve, Philip Jefferson stated that “it will be appropriate to maintain the current restrictive stance of monetary policy for longer” if inflation does not slow as expected. “A day begins with a negative bias for risk assets that are transmitted to the currencies of the region and the world, which lose against the dollar,” indicated a note from Itaú bank.
“The prospect of a moderate monetary change in the United States has faded (…) and persistent geopolitical tensions in the Middle East remain one of the levers of uncertainty,” wrote Pierre Veyret, technical analyst at ActivTrades. “It is not surprising that risk appetite is coming under strong pressure,” he added.
Added to this was a report from the International Monetary Fund (IMF) in which it said that Latin America and the Caribbean will notice a slight slowdown of its economy this year largely due to slower activity in its main growth engines, Brazil and Mexico.
The chief economist of the IMF, Pierre-Olivier Gourinchas, warned that a broader conflict between Israel and Iran would likely cause an increase in energy prices, which in turn would lead central banks to tighten monetary policy to control inflation, harming growth.
Brazilian real: how much is it trading at this Tuesday, April 16, against the dollar
He Brazilian real fell 1.6% to 5.2680 units per dollar and the Bovespa stock index fell 0.8% to 124,352.93 points.
For its part, The Mexican peso depreciated 1.8% to 17.0248 units per dollar, its worst level since February; while the S&P/BMV IPC stock index fell 0.15% to 55,899.80 points, in its third consecutive day of losses, while at the local level the session was marked by the beginning of the corporate results season for the first quarter.
The Colombian peso fell 0.59% to 3,934 units per dollar, accumulating seven sessions of losses and reaching its lowest level in seven weeks; while the stock index of the local stock market, the MSCI COLCAP, rose a marginal 0.03% to 1,380.65 points.
The Chilean peso fell 0.34%, to 984.20/984.50 units per dollar, pressured by a sharp drop in the prices of copper, the country’s main export, while the leading index of the Santiago stock exchange , the IPSA, fell 0.89%, to 6,421.86 points. Copper prices fell 1.5% in London, after the weakening of industrial data in China, the main consumer of metals, and the strengthening of the dollar.
The Peruvian currency, the sol, depreciated 0.40% to 3.743/3.755 units per dollar. Meanwhile, the Lima Stock Exchange benchmark fell 0.21% to 703.66 points.
Source: Ambito
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