In the News

EMERGING MARKETS-Chilean peso leads Latam FX lower, eyes on Colombian inflation

Sept 7 (Reuters) - Latin American currencies were mixed against a firmer dollar on Thursday, with the Chilean peso lagging on lower copper prices, while traders awaited Colombia's monthly inflation print later in the day.

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  • Mexican inflation slows for seventh consecutive month in Aug
  • Peru president reshuffles cabinet for second time in six months
  • POLL-Argentina peso at risk of another devaluation post election
  • Colombia Aug inflation awaited

MSCI’s index for Latin American currencies fell 0.1%, its third straight day of declines as the dollar edged higher. Top copper producer Chile’s peso lost 1.4%, touching over eight-month lows as prices of the red metal slid.

Copper prices fell to their lowest in more than two weeks after a sharp rise in inventories and weak imports by top metals consumer China highlighted supply and demand fundamentals.

Central bank data, however, showed Chile’s copper exports reached $3.71 billion in August, up 8.3% year-on-year, while the country posted a trade surplus of $586 million. Mexico’s peso edged 0.1% lower, extending declines to a sixth straight session.

Data showed Mexico’s annual inflation slowed in August for the seventh consecutive month to 4.64%, with the core index returning to 2021 levels.

“It was in some sense predicted by Banxico that this inflationary momentum was going to pick up and that was going to give them plenty excuse to not have to raise interest rates any further,” said Juan Perez, director of trading at Monex USA. “(Banxico) have been able to keep up with the Federal Reserve in being aggressive in combating inflation by hiking interest rates in tandem.”

The central bank kept its interest rate unchanged last month, while suggesting higher-for-longer rates to bring inflation to target. Colombia’s peso gained 1.4%, touching an over three-week high ahead of the release of August inflation data.

Peru’s sol edged 0.2% lower. Copper production in Peru rose 17.7% year-over-year in July, the Andean country’s ministry of energy and mines said.

Peru’s President Dina Boluarte reshuffled six posts in her cabinet on Wednesday, the second partial revamp in her eight-month-old administration while retaining ministers overseeing key economy and energy and mining portfolios. The Brazilian equity market was closed on Thursday for Independence day.

The MSCI Latam currencies index fell 0.1% after a near 1.5% drop seen over the past two days. EM currencies are seen struggling to reclaim the ground lost this year, as high U.S. Treasury yields and safe-haven demand keeps the dollar ascendant, a Reuters poll showed.

Additional polls revealed Mexico’s peso and Brazilian real are expected to weaken 2.3% to 17.84-per-dollar and 1.2% to 5.03-per-dollar, respectively, in 12 months. Another Reuters poll showed Argentina’s troubled peso is at risk of another devaluation after October’s presidential election or a potential second round in November.

After the Peronist government depreciated the official exchange rate by nearly 18% and pegged it at 350-per-dollar in August, economists now expect a devaluation of
16.6% to 419.8-per-dollar in 3 months.

Reporting by Ankika Biswas, Johann M Cherian and Shashwat Chauhan in Bengaluru; Editing by Alexandra Hudson and Richard Chang

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