SAO PAULO: Latin American currencies strengthened on Wednesday following disappointing US economic data, though Brazil's real stayed anchored near the key 3-per-dollar level.
Equities markets were mixed, with MSCI Latin American stock index edging slightly higher, though Brazil's Bovespa index dropped for a second straight day.
Data on Wednesday showed US retail sales were flat in April, indicating the economy was struggling to rebound strongly after barely growing in the first quarter.
Disappointing economic data from the US tends to raise investor expectations that interest rates in the world's largest economy will rise later rather than sooner, boosting the appeal of higher-yielding, albeit riskier, emerging market assets.
Nearly every Latin American currency gained against the dollar, with the Chilean and Mexican pesos both up about 0.5 percent.
Brazil's real strengthened about 1 percent against the dollar in early trading, though returned to nearly unchanged territory by early afternoon.
Many traders believe the real is unlikely to sustain a level stronger than 3 to the dollar for the time being due to reduced currency intervention from Brazil's central bank.
"Many people are trading as if this level were the floor," said a trader at a major bank who is not authorized to speak with the press.
In local stocks, Brazil's Bovespa stock index dropped its most in a week, mostly on a decline in bank shares and iron-ore manufacturer Vale SA.
Vale shares tend to track the outlook for economic growth in China, its main customer, which reported its lowest pace of investment growth in 15 years on Wednesday.
Mexico's IPC stock index remained rangebound near the 45,000 point level, where it has remained since the beginning of the month.
Comments
Comments are closed for this article.