Almost all Latin American currencies fell against the currency

Almost all Latin American currencies fell against the currency

Lime – The recent statements by Jerome Powell, president of the Federal Reserve (FED), have shaken the markets. This time the majority of Latin American currencies suffered the impact, which fell -some strongly- compared to a stronger dollar globally.


The price of the spot dollar, according to Bloomberg, rose 0.7%while the stock markets around the world, together with the price of oil, fell at the close of operations this Friday, April 22.

Jerome Powell said last Thursday that a half-point raise is “on the table” for the meeting that the FED has scheduled for the month of May, and at the same time the markets are anticipating that more increases in US interest rates may be announced to contain the inflation of the American power.


The real of Brazil, currency that had been leading the gains so far this year among the currencies of emerging countries, was the currency that was devalued the most at the close of the day this Friday, falling 4% during the session compared to the US dollar. In the end, the sale of the dollar in Brazil closed at 4.80 reais for US$1; a decline of 3.77% according to Bloomberg. In fact, The Brazilian currency suffered its worst fall in almost two years.

The Colombian peso followed along the same line, also affected by the drop in oil prices. The coin (USD:COP) fell 2.14% against the US currency at the end of the day. In third place was the Chilean peso, with a fall of 1.27% at the close.

Given the pronouncements of members of the European Central Bank and the FED in the US, where faster actions are expected to contain inflation, less liquidity is perceived and the stock markets correct downwards, this movement is traditionally related to worse performance of currencies in emerging countries. For this reason, regions such as Colombia, Chile and Brazil have presented depreciation at levels not seen in the last month.”, pointed out Ana Vera, chief economist at IN ON Capital.

The expert stressed that they expect the volatility in Latin American currencies to continue, which could follow two paths: on the one hand, they could be strengthened given the appetite for the region and the weakness of Eastern Europe; and on the other hand, they could be harmed by socio-political uncertainty at a global level or the idiosyncratic changes of each market that affect investments in capital markets.

In Chile, the issue of the new withdrawal processes of savings in pension funds, for example, and the issues of mining resource management by the Government, is something that worries us.Vera noted.

In Peru the price of the dollar (USD:PEN) closed at 3.77 soles per US$1, after marking a volatile week influenced by local and international factors. “During the day, 277 million dollars were traded at an average price of 3,767 soles; and the demand for dollars came from offshore, local companies for the payment of dividends and from instruments of the Central Reserve Bank such as exchange swap sales for 838 million soles”, indicated Allison Pérez, Foreign Exchange trader at Renta4.

Meanwhile, in Argentina, the informal peso (blue dollar) fell: the price of the dollar on the black market put aside the calm seen last week and rose to $8 since Tuesday to trade at $203 for sale this Friday.

💰 📈 The coins that lost the least: Although they also marked setbacks at the end of the day, the Mexican peso and the Uruguayan peso were some of the least affected Latin American currencies on the day. The Venezuelan bolívar remained at the same trading price as last Thursday, while the Costa Rican colon rose 0.21% compared to the greenback.


💸 Currency ranking so far this year

The Chilean peso has been steadily devaluing in recent weeks and as of April 22 has erased almost all of its gains against the US dollar: so far this year it has appreciated by 1.82% according to Bloomberg, far from what its regional peers (Peruvian sol and Colombian peso) continue to post. The Brazilian real continues to lead the ranking of regional and emerging market currencies. Meanwhile, the Uruguayan peso surprises by placing second among the currencies that have appreciated the most in Latin America.



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