Emerging market currencies turned to
losses on Friday after strong payroll numbers from the United
States raised bets of another large hike by the Federal Reserve,
sending the dollar soaring.
South Africa’s rand, Chile’s peso and the
Colombian currency lost 1% each, while the Chinese yuan
gave up session losses to trade 0.2% lower.
Mexico’s peso fell 0.1%, while Brazil’s real
slipped about half a percent.
A lesser-than-expected hike in Romania’s key interest rate
made little difference to the leu which traded flat,
despite the dollar rally weighing on the euro.
U.S. employers hired 528,000 workers in July, more than
double what was expected, and the unemployment rate fell to a
pre-pandemic low of 3.5%, providing the strongest evidence yet
that the economy was not in recession, and keeping the Fed on
track to hike.
“It’s a blockbuster number. It really clears the path for
the Fed to continue with the hawkish viewpoints that have been
expressed recently, that they need to continue to really press
on inflation,” said Dean Smith, chief strategist at Foliobeyond,
“A 75 basis points hike in September is most likely.”
Bets for a 75 bps hike in September rose 65% as per
In Argentina, inflation in July could be so high that it
will “shock” Argentina’s government, an economy ministry source
told Reuters. This comes as new economy minister Sergio Massa
took office Wednesday in the midst of an economic crisis,
announcing measures intended to ensure fiscal austerity and to
shore up dwindling foreign currency reserves.
In the 12 months through June consumer prices hit 64.0%,
even as the central bank hiked the benchmark interest rate by
300 basis points to 52% last month to tame spiraling inflation.
Stocks in the region painted a brighter picture, with Brazil
shares gaining for a fourth straight session and hitting
eight-week highs, while Chile’s IPSA rose after a
four-session losing run.
Mexico, which is more dependent on the United States, saw
its shares fall, in line with main stocks indices on Wall
Key Latin American stock indexes and currencies at 1416 GMT:
Stock indexes Latest Daily %
MSCI Emerging Markets 1001.63 0.71
MSCI LatAm 2136.00 0.69
Brazil Bovespa 106419.01 0.5
Mexico IPC 46814.02 -0.22
Chile IPSA 5190.26 0.28
Argentina MerVal – –
Colombia COLCAP 1286.10 0.36
Currencies Latest Daily %
Brazil real 5.2270 -0.09
Mexico peso 20.3682 -0.21
Chile peso 909.3 -0.86
Colombia peso 4331.5 -1.06
Peru sol 3.8837 -0.11
Argentina peso 132.8600 -0.16
(Reporting by Susan Mathew in Bengaluru; Editing by Alistair
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