(Reuters) -Most Latin American currencies slightly bucked the global risk-off sentiment on Tuesday amid escalating tensions between Russia and Ukraine, with only the Brazilian real slipping.
The Mexican peso MXN= reversed early losses to last trade up 0.46%, on track for a five-day winning streak, while the Chilean peso COP= ticked up 0.1%.
Russian President Vladimir Putin lowered the threshold for a nuclear strike in response to a broader range of conventional attacks, and Moscow said Ukraine had struck deep inside Russia with U.S.-made ATACMS missiles.
The attacks followed reports this week that U.S. President Joe Biden would allow Ukraine to fire American long-range missiles deep into Russia.
Investors fled to safe-haven currencies such as the U.S. dollar =USD, Japanese yen JPY=EBS and the Swiss franc CHD=D3, while gold XAU= also rose. FRX/GOL/
The modest deviation in Latin American assets from the global risk-off sentiment came as investors did not perceive any immediate geographical risks associated with the Russia-Ukraine conflict. MKTS/GLOB
“Investors would want to get away from those regional assets (assets close to Ukraine), and go towards where you’re going to get a bit more safety. Latin America absolutely is a safer bet today than other regions would be,” said Juan Perez, director of trading at Monex USA.
The Bank of Mexico will likely be able to continue cutting its benchmark interest rate due to the progress made on bringing inflation down, bank Governor Victoria Rodriguez told Reuters in an interview.
The focus turns to the release of GDP figures on Friday.
But on the losing side Brazil’s real BRL= was down 0.45%, while Colombia’s peso CLP= edged 0.1% lower.
Brazilian central bank chief Roberto Campos Neto said the country faces a clear inflation challenge, pointing to concerns about service inflation and inflation expectations unanchored from the official target.
Also on the radar this week will be the release of the Brazilian government’s package of spending cuts, which Finance Minister Fernando Haddad said in an interview over the weekend could be released soon.
Colombia needs to cut budget spending by 56 trillion pesos ($12.7 billion) to comply with its fiscal rule this year, an independent committee of experts said, a much higher figure than is being discussed publicly by officials.
Argentina’s peso ARS= edged past 1,000 pesos per U.S. dollar, marking the first time the official exchange rate weakened into four-digit territory.
Local bourses were mixed, though Argentina’s benchmark .MERV jumped more than 4% to a record high, as traders returned after a local market holiday on Monday.
MSCI’s index for Latin American currencies .MILA00000CUS dipped 0.1%,while a gauge for stocks .MILA00000PUS was flat.
Latin American assets have struggled recently as markets mulled U.S. President-elect Donald Trump’s fiscal, trade and immigration policies, which could be a drag on most developing economies.
All eyes are on Trump’s cabinet selection, with the search for a Treasury secretary widening after last week’s picks for health and defense roles.
