In the News

EMERGING MARKETS-Latam FX slides as dollar firms, Colombian peso near 6-week low

NEW YORK, FEB 15 (Reuters) - Latin American currencies slid on Wednesday against a stronger dollar after a slew of economic data added to fears of a more aggressive U.S. Federal Reserve, while Colombia's peso dropped to a six-week low to lead losses among regional peers.

  • Dollar firms on fears of more aggressive Fed
  • Brazil’s Haddad: discussing rate level ‘more important’
  • Argentina to hold rate at 75% as inflation reheats
  • Colombians march to support Petro’s social and economic reforms
  • FX falls 1%, stocks off 0.9%

The dollar index =USD jumped in the wake of stronger-than-expected retail sales data underscoring a resilient U.S. economy, and stubbornly high U.S. inflation data overnight suggesting that the Fed was far from pausing its interest rate hiking campaign.

The MSCI’s index for Latin American currencies. MILA00000CUS fell 1.0% by 1455 GMT, lagging the broader emerging markets index. MIEM00000CUS.

Colombia’s peso COP= fell 2.5% against the dollar ahead of GDP data that is expected to show the economy contracted last quarter.

This follows overnight numbers that showed December’s core retail sales and manufacturing contracted in the region’s fourth-largest economy.

“Colombia is a country that has a combination of all of the negative factors that will affect their currency and sink it such as labor strikes, a global economy that doesn’t seem to be necessarily recovering, and a U.S. economy that is relentless,” Juan Perez, director of trading at Monex USA, said.

“Investors are losing faith in the Colombian economy and that’s why you have a start of the year that also shows that the safer bet is to hold on to your dollars than invest in Colombia.”

Colombians took to the streets across the country’s major cities on Tuesday to support economic and social reforms put forward by President Gustavo Petro as part of efforts to reduce poverty, exclusion and inequality in the South American country.

The International Monetary Fund said Colombia’s central bank may need to consider additional hikes to its benchmark interest rate, depending on how inflation behaves.

The currency of the world’s biggest copper producer, Chile CLP=, slid 1.3% tracking prices of the red metal as demand uncertainty outweighed supply disruptions, while the Peruvian sol PEN= slipped 0.3%.

Mexico’s peso MXN= slid 0.9% against the greenback.

The Brazilian real BRL=, BRBY fell 0.7% after Finance Minister Fernando Haddad said discussing the interest rate level was more important than debating inflation targets.

Stocks in Latin America .MILA00000PUS fell 0.9%, tracking the slide in global markets.

Argentina’s central bank is set to hold its benchmark interest rate steady at 75% this week despite inflation gaining pace once more, but hopes of a potential rate cut early this year are fading as prices heat up, bank sources told Reuters.


Reporting by Shubham Batra; Editing by Shounak Dasgupta
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