Emerging markets currencies review: Most LatAm currencies strengthened
Most Latin American currencies strengthened on Thursday on expectations that U.S. President Donald Trump will appoint a less hawkish head of the Federal Reserve than expected.
Politico reported on Tuesday that Treasury Secretary Steven Mnuchin favors the appointment of Fed Governor Jerome Powell as Fed chair over former Governor Kevin Warsh, who is seen as more
hawkish.
The report fueled expectations that U.S. interest rates will rise slowly in coming months as inflation remains stubbornly below the U.S. central bank’s 2 percent target
Currencies from Brazil, Chile and Colombia firmed between 0.2 percent and 0.7 percent, supported by the prospect of stronger demand for high-yielding assets.
That perception lost some steam, however, following stronger-than-expected service-sector figures, which boosted the likelihood that the Fed will hike rates in December.
Brazil’s benchmark Bovespa stock index seesawed after jumping the most since August to an all-time high the day before. Still, analysts expect Brazilian stocks to continue rising as Latin America’s largest economy emerges from its deepest recession in a century.
“Yesterday’s advance may invite some profit-taking today, but the long-term trend still points upward,” Modalmais chief economist Alvaro Bandeira said.
Shares in state-controlled oil company Petróleo Brasileiro SA slipped 1 percent as investors booked profits from the previous day’s rally. The stock rose sharply on Wednesday after a minister said a privatization would be feasible in the long run.
Key Latin American stock indexes and currencies at 1720 GMT:
Source: Reuters – Emerging Markets: Most Latin American currencies strengthened
