NEW YORK, March 16 (Nasdaq) - Most Latin American currencies bounced against a weaker dollar on Wednesday as market sentiment was boosted by Chinese stimulus hopes and continued peace talks between Ukraine and Russia, though traders remained on edge ahead of what is likely to be the first U.S. interest rate hike in three years.
Most Latin American currencies bounced against a weaker dollar on Wednesday as market sentiment was boosted by Chinese stimulus hopes and continued peace talks between Ukraine and Russia, though traders remained on edge ahead of what is likely to be the first U.S. interest rate hike in three years.
Chinese Vice Premier Liu He urged government bodies to roll out market-friendly policies, boosting shares in China, Hong Kong, and other markets a day after Chinese stocks slumped to a 21-month low. MKTS/GLOB
MSCI’s index for Latin American stocks. MILA00000PUS firmed 2.4% – its first day of gains in the last five – and its’ currencies counterpart. MILA00000CUS added 0.6%, after declines on Tuesday.
Aiding confidence, Ukraine’s President Volodymyr Zelensky said negotiations on the Russia-Ukraine conflict were becoming “more realistic”, while Russian Foreign Minister Sergei Lavrov said there was “some hope for compromise”.
“The positive EM moves are based on good news out of China, and chances of a ceasefire, which markets are waiting to see … (Investors) are also taking advantage of the dollar’s momentum losing steam because the rate hike has already been priced in,” said Juan Perez, director of trading at Monex USA.
The dollar index =USD, which measures the greenback against six major currencies, dropped ahead of an interest rate decision by the Federal Reserve. Markets expect the U.S. central bank, which will issue a policy statement and new economic projections at 2 p.m. EDT (1800 GMT), to raise its benchmark overnight interest rate by a quarter of a percentage point. FRX/
“Anything that seems like good news is lifting spirits, and indications of a very hawkish outlook could crush that optimism and erase these gains,” Perez said.
A recent surge in raw material prices has given way to increased investor bets on commodity-rich Latin American economies, though sharp corrections in commodity prices seen this week could lead to volatility as markets move quickly to discount the war and its implications, according to analysts.
Brazil’s real BRL= gained 0.6% against the dollar. The wheat importer exported around 2.5 million tonnes of wheat from December to March, an unprecedented volume driven by a historically good harvest in 2021, while demand has been further boosted by the war between major suppliers Russia and Ukraine.
Mexico’s peso MXN= added 0.4%, and Chile’s peso CLP= jumped 0.7%.
Optimism over the peace talks between Russia and Ukraine also held up gains in most central European currencies including the Polish zloty EURPLN= and Czech crown EURCZK=, which were 0.7% and 0.9% stronger against the euro, respectively, while the Hungarian forint EURHUF= slid in a move that traders called a correction of recent gains.
Key Latin American stock indexes and currencies at xx GMT:
Stock indexes
Latest
Daily % change
MSCI Emerging Markets. MSCIEF
1081.10
5.29
MSCI LatAm .MILA00000PUS
2375.73
2.41
Brazil Bovespa .BVSP
110918.04
1.8
Mexico IPC .MXX
53709.31
1.32
Chile IPSA .SPIPSA
4694.26
1.54
Argentina MerVal .MERV
85446.85
1.656
Colombia COLCAP .COLCAP
1524.58
0.16
Currencies
Latest
Daily % change
Brazil real BRBY
5.1158
0.82
Mexico peso MXN=D2
20.7226
0.47
Chile peso CLP=CL
801.3
1.05
Colombia peso COP=
3818.01
0.18
Peru sol PEN=PE
3.709
0.73
Argentina peso (interbank) ARS=RASL
109.4200
-0.09
Argentina peso (parallel) ARSB=
197.5
1.27
Reporting By Anisha Sircar and Shreyashi Sanyal in Bengaluru Editing by Paul Simao
