BRASILIA: Most Latin American currencies slipped after rising in the last session on Friday, capping of a week of nervy trading in lead-up to the US presidential elections.
Brazil’s real led declines, down 0.3% to 5.6829 per dollar after rising for the last three session, while Mexico’s peso also eased 0.3% in volatile trading.
Colombia’s peso held firm at 4,293.14 per dollar, while Chile’s peso weakened 0.3% to 949.3 per greenback.
Most currencies in Latin America traded cautiously this week as market participants scaled back bets of large Fed rate cuts and gauged Donald Trump’s possible return as the US president heading into the elections on Nov. 5.
“Markets are now in a mini regime of heightened volatility ahead of US elections, with polling outcomes still very close to 50-50,” analysts at Citi wrote in a morning note.
“The risk appetite remains low as the results can be binary, especially for some EM jurisdictions.”
Trump’s proposed policies on taxes and tariffs are seen as inflationary, likely keeping US interest rates high and undermining the currencies of trading partners such as Mexico.
MSCI’s gauge for Latin American stocks added 0.5%, with the Brazilian benchmark up 0.3%.
Brazilian miner Vale, one of the world’s largest iron ore producers, rose 2.5% after beating third quarter profit estimates.
Meanwhile, Argentina’s dollar-denominated sovereign bonds extended gains after the World Bank and the Inter-American Development Bank (IDB) late on Wednesday granted the country with $8.8 billion in financing. The security maturing in 2029 rose more than 1.6 cents on the dollar, last bid at 71.17 cents.
The International Monetary Fund on Friday urged governments in Latin America and the Caribbean to target economic policies aimed at boosting potential growth, saying their reform agenda is currently “thin” while activity is expected to moderate in key economies.
Elsewhere in emerging markets, Russia’s central bank hiked its key interest rate by 200 basis points to 21%, the highest level since the early years of President Vladimir Putin’s rule, when Russia was recovering from the chaos that followed the collapse of the Soviet Union.
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