Thursday, October 28

Peru’s sol leads Latam FX higher as dollar dips; Chile in focus

Article content

Most Latin American currencies rallied on

Wednesday as the dollar tracked US Treasury yields lower, with

Peru’s sol rising almost 2%, while Chile’s peso was up nearly 1%

ahead of a widely anticipated interest rate hike by the central


Peru’s sol surged to 11-week highs, gaining for a

fifth straight session after a seemingly moderate shift in

President Pedro Castillo last week cheered


After raising the rate to 1.5% in August, Chile’s central

bank is broadly expected to hike rates by at least 75 basis


Article content

points to 2.25%. Some analysts have flagged the possibility of a

150 bps hike.

The peso moved further away from 1-1/2-year lows with

investors watching for comments on how the central bank planned

to respond to a recent spike in inflation.

“The adverse inflation result in September, the likely

deterioration of inflation expectations, and the still-strong

economic performance, will probably lead the bank to accelerate

the removal of monetary stimulus,” Credit Suisse analysts wrote

in a note. They expect the bank to hike by 100 bps.

On the political front, Chilean opposition lawmakers

launched impeachment proceedings against right-leaning President

Sebastian Pinera on Wednesday over revelations made in the


Article content

Pandora Papers. This comes ahead of presidential elections in


Most other Latam currencies rallied as falling US Treasury

yields saw the dollar give up gains made after a solid rise in

US inflation spurred bets of faster tightening by the Federal

Reserve. Minutes from central bank’s last meeting showed they

could start tapering in


A director at Brazil’s central bank said the risk of

out-of-control inflation in the United States would create a

much more challenging outlook for emerging markets.

Concerns over rising inflation have hurt emerging market

assets in recent months, with a spike in oil prices adding more

pressure on several import-reliant economies.

Brazil’s real reversed session losses to trade 0.5%


Article content

higher, and stocks in Sao Paulo rose 1.3%. Economy

Minister Paulo Guedes said the government remained committed to

pushing through tax and public administration reforms, and that

medium-term fiscal sustainability remains critical.

Chile’s main equity index hit 11-month lows,

falling as much as 3%, as retailer Cencosud sank

18% despite announcing a dividend.

In Colombia, the peso fell from over three-month

peaks as oil prices slipped after steadying earlier in the day.

Key Latin American stock indexes and currencies:

Stock indexes Latest Daily%


MSCI Emerging Markets 1262.67 0.72

MSCI LatAm 2245.62 1.28

Brazil Bovespa 113676.89 1.33

Mexico IPC 51755.96 -0.15

Chile IPSA 4006.91 -2.34

Argentina MerVal 78286.87 0.461

Colombia COLCAP 1393.55 0.51

Currencies Latest Daily%


Brazil real 5.5077 0.52

Mexico peso 20.5871 0.91

Chile peso 815.6 0.72

Colombia peso 3741.4 -0.60

Peru sol 3.9653 1.53

Argentina peso 99.1200 -0.02


(Reporting by Ambar Warrick; Editing by Andrea Ricci and

Marguerita Choy)



Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

Leave a Reply

Your email address will not be published. Required fields are marked *