SAO PAULO: Latin American currencies on Monday rebounded from the previous week's selloff as rising prices of basic products drove investors to hunt for bargains.
Currencies from Brazil, Mexico and Chile firmed between 0.3 and 0.9 percent after suffering hefty losses on Friday. Colombian markets were closed due to a local holiday.
Upbeat data on US services and manufacturing drove investors to sell high-yielding assets, betting that US interest rates could rise faster than expected as the economy recovered.
Still, concerns over US President Donald Trump's ability to pass tax reform plans kicked back on Monday, dampening those expectations.
"While tax cuts are not needed for healthy growth, they do matter," economists at Bank of America Merrill Lynch wrote in a report.
"A large unfunded tax cut would likely create a boom-bust scenario, boosting near-term growth, but forcing a much faster Fed exit in an attempt to forestall inflation."
A jump in commodity prices also helped to fuel demand for currencies from exporters of basic materials, such as oil-heavy Mexico.
Crude prices hit their highest since July 2015 on Monday as Saudi Arabia's crown prince cemented his power over the weekend with an anti-corruption crackdown, while markets continued to tighten.
Shares of Brazilian state-controlled oil company Petrobras also rose, while miner Vale SA and steelmakers Usinas Sider?rgicas de Minas Gerais SA and Cia Siderrgica Nacional SA tracked iron ore prices higher.
Brazil's benchmark Bovespa stock index rose 0.2 percent, with shares of insurance firm BB Seguridade Participa??es SA leading gains following strong quarterly results.
Shares of planemaker Embraer SA, however, slipped 1.2 percent as investors booked profits on Friday's gains.
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