Latin American currencies rallied on Wednesday after several days of descents, upon returning a boost in risk appetite amid a moderate decline in the dollarafter suffering in the previous session as the prospects for an early interest rate cut by the United States Federal Reserve faded.
In that context, The dollar retreated, but remained near a five-month high and a half after the Fed reiterated that it is likely that interest rates remain high for longer.
The president of the Federal Reserve, Jerome Powellsaid on Tuesday that The US central bank may have to keep interest rates high for longer than previously thought.given what he described as a “lack of greater progress” this year towards the 2% inflation target.
How they closed this Wednesday
He Mexican peso advanced 0.6% to 16.9701 per dollar, after losing more than 2% after Powell’s comments on Tuesday, in its worst day since October 2023.
“We consider it likely that, initially, the session will be characterized by a moderate return of risk appetite. This, to the extent that the words issued on Tuesday by the president of the Federal Reserve (Fed), Jerome Powell, are left behind” said the Ve Por Más brokerage.
While, The leading S&P/BMV IPC index, which groups the most traded shares in the Mexican market, fell 0.6% to 55,440.84 pointsexpanding the declines accumulated in the three previous sessions of 1.8%.
The deputy governor of the central bank of Mexico (Banxico) Jonathan Heath said it is important be very cautious and patient, and not prematurely start a cycle of normalization of the reference interest rateaccording to an interview published on Wednesday in a Banorte podcast.
In Brazil, The real rose 0.46% to 5.2445 units per dollarinterrupting a negative streak of five sessions of losses, while the main index of the B3 stock market in Sao Paulo, the Bovespa, registered its sixth consecutive drop by losing 0.16% to 124,191.79 units.
The Chilean peso closed the day with an increase of 0.7%, at 975.50/975.80 units per dollar, driven by the slight decline of the US currency in global markets and a strong rebound in the price of copper, the country’s main export. Meanwhile, the leading index of the Santiago stock market, the IPSA, rose 0.41%, to 6,457.05 points.
Copper prices rose in London as support from a weaker dollar offset concerns about demand from China, the world’s top consumer of metals.
Besides, The Central Bank of Chile evaluated cutting the reference interest rate by up to 100 basis points in the April monetary policy meeting, although by majority the councilors chose to reduce it by 75 points, according to the minutes released on Wednesday.
The Colombian peso closed with an appreciation of 0.5% to 3,899.10 units per dollar, after seven consecutive sessions of falls; while on the stock market the MSCI COLCAP stock index ended with a decrease of 1.33% to 1,350.12 points.
The Peruvian currency, the sol, appreciated 0.21% to 3.746/3.747 units per dollar. Meanwhile, the benchmark of the Lima Stock Exchange was trading stable at 708.37 points.
Source: Ambito
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