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Argentine peso rebounds after bruising sell-off; Latam FX firm


Reuters


By Sruthi Shankar

Aug 15 (Reuters) - Argentina's peso jumped on Thursday after a bruising sell-off in the past three sessions and most other Latin American currencies stabilized amid receding worries about a recession in the world's largest economy.

The Brazilian real jumped as much as 1% before easing slightly to trade at 4.0286 per dollar after the central bank announced its decision to sell dollars in the spot currency market for the first time in over a decade.

The Mexican peso edged higher ahead of the central bank's decision on interest rates, due at 2:00 p.m. EDT (1800 GMT). Analysts expect policymakers to hold rates at 8.25%, according to a Reuters poll, although they are expected to adopt a dovish tone pointing to impending rate cuts.

"While our economists call for the easing cycle to begin in September, they note a high risk for an August start," Citi analysts wrote in a note.

"If they cut at this meeting, we would imagine it comes with language that tries to dissuade the market from positioning for a very deep cutting cycle, partly because Banxico wants to observe how MXN reacts to the easing."

Latin American currencies and stocks lost steam on Wednesday amid a slump in global financial markets after moves in U.S. bonds signaled that the world's biggest economy will tip into recession in the wake of a prolonged trade dispute with China.

Easing some of those fears was data that showed U.S. retail sales rose more than expected last month, suggesting fairly robust consumer spending.

However, mixed reports on the U.S.-China trade front kept investors wary. News that China will retaliate against the latest U.S. tariffs hit global stocks, which turned around after a Beijing official said China hoped the two sides will come to deal.

The Argentine peso opened stronger after a three-day rout in the currency on investor worries about the country's return to populist policies after business friendly President Mauricio Macri fared worse than expected in this week's presidential primaries.

The peso jumped nearly 4.7% to trade at $57.5 per dollar after shedding more than 24% over the past three days even as Macri announced a series of welfare subsidies and tax cuts for lower-income workers. Opposition candidate Alberto Fernandez said he was comfortable with the current exchange rate of 60 pesos per U.S. dollar.

Latin American stock indexes and currencies at 1344 GMT:

Stock indexes

Latest

Daily % change

MSCI Emerging Markets

961.82

-0.27

MSCI LatAm

2568.64

-1.07

Brazil Bovespa

99335.09

-0.92

Mexico IPC

-

-

Chile IPSA

-

-

Argentina MerVal

-

-

Colombia IGBC

-

-

Currencies

Latest

Daily % change

Brazil real

4.0373

0.39

Mexico peso

19.6785

-0.02

Chile peso

-

-

Colombia peso

3457.64

-0.06

Peru sol

-

-

Argentina peso

57.4955

4.82






This article appears in: Politics , Stocks , World Markets



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