Some of the main Latin American currencies gained ground on Friday (22), trailing the appreciation of raw materials, while outside the region Russia’s ruble extended losses after the country’s central bank cut interest rates in 150 basis points, more than expected.
The Mexican peso rose 0.4%, the Brazilian real jumped 0.7% – best performance in the region this Friday – and the Colombian peso advanced 0.2%. The Chilean peso depreciated 0.4%, while the Peruvian sol hovered around stability.
“In Brazil, which along with Mexico had the slowest recovery in Latin America so far, we anticipate a recession on the consumption side. We believe that Bolsonaro’s (Jair Bolsonaro, Brazilian president) pre-election fiscal aid pledges will create a negative fiscal boost in early 2023, when real interest rates will be at their peak,” said Marcos Casarin, chief economist for the Latin America from Oxford Economics.
Brazilian fixed income markets are pricing in the highest levels of risk in years, raising red flags among investors and government officials who see little relief in sight.
For the week, Latin American currencies hovered around stability, and equities rose nearly 2%.
Meanwhile, the Russian ruble depreciated beyond 58 to the dollar, hitting a day low just after the central bank cut interest rates for the fourth time this year by 150 basis points (a faster-than-expected pace), to 8%.
Source: CNN Brasil
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