Latin American currencies recovered from
recent losses on Friday but were set to end the week lower on
turbulent commodity markets and concerns over Chinese economic
Mexico’s peso led the charge, up 0.8% and capping
weekly losses at around 0.4% as the dollar slipped on profit
taking. MSCI’s index of Latam currencies was up
0.6%, breaking a 9-day losing streak.
“Risk sentiment seems to be finding its footing again,” said
Mazen Issa, senior FX strategist at TD Securities.
Chile’s peso rose 0.7%, tracking higher copper prices
after major importer China cut the amount of cash that banks
need to hold to boost an economic recovery.
But China’s move to cut the reserve requirement ratio (RRR)
raised broader questions over the pace of an economic recovery
in the country, given that it has so far led a post-COVID
An economic slowdown in China would be negative for Latin
America given the region’s large dependence on China as a
destination for agriculture and mining exports.
“We think this week was in part driven by a growth scare
amid some concern for rising infections that made hawkish pivots
by central banks a bit ambitious,” he said. “Typically, a
cooling in growth has led to a moderation in risk.”
On the week, emerging currencies were set to end lower, with
a 3.8% percent drop by Brazil’s real being the
The real did not trade on account of a holiday on Friday.
Growing concerns over political unrest in the country have
detracted from the real’s appeal.
Two polls on Thursday showed President Jair Bolsonaro’s
disapproval ratings rose to the highest level since he came to
power 2-1/2 years ago, amid growing discontent over his
administration’s handling of the COVID-19 pandemic.
Colombia’s peso ended the week down more than 2%.
Wild swings in oil prices after the breakdown of OPEC talks
hampered the currency through the week.
Most Latin American stocks rose in early trade, tracking a
broader recovery in global markets after steep losses through
the week. MSCI’s index of regional stocks was
set to lose 4% this week, its worst week in more than four
Argentine markets were closed for a holiday.
Key Latin American stock indexes and currencies:
Stock indexes Latest Daily %
MSCI Emerging Markets 1319.38 0.24
MSCI LatAm 2511.62 0.81
Mexico IPC 49709.64 0.28
Chile IPSA 4232.44 1.06
Colombia COLCAP 1294.65 0.83
Currencies Latest Daily %
Mexico peso 19.8534 0.71
Chile peso 748.3 0.56
Colombia peso 3827 0.26
Peru sol 3.9646 -0.41
(Reporting by Ambar Warrick; Editing by Dan Grebler and Andrew