The currency and stock markets of Latin America fell sharply on Monday, dragged down by massive purchases of dollars by investors as a safe-haven asset, amid the increasingly cloudy global economic outlook between high inflation and the winds of recession. .
Added to this was the fall in oil prices -an important generator of foreign exchange for many countries in the region-, while the markets were preparing for possible massive tests of COVID-19 in China.
“With inflation numbers (in the United States) forecast to hit the highest level in four decades, another 75 basis point interest rate hike is expected when the Federal Reserve makes its next rate decision, which that creates a margin for further increases in the dollar,” said Ricardo Evangelista, senior analyst at ActivTrades.
“Meanwhile, in Europe the situation is worrying as the ongoing energy crisis looks set to deepen and increase the chances of the continent being mired in recession,” he added.
The falls were led by the Colombian peso, which fell 2.30% to a record low of 4,522 units per dollar, in its eighth consecutive fall. In the stock market, the benchmark MSCI COLCAP index fell 0.38% to 1,349.73 points.
The Chilean peso fell 1.6% to 993.20/993.50 units per dollar, amid a significant drop in the price of copper, the country’s main export, in addition to local uncertainty ahead of the next plebiscite on September 4 in which the country must choose to maintain or change the constitution.
Earlier, the local currency broke the barrier of 1,000 units per dollar.
Likewise, the main index of the Santiago Stock Exchange, the IPSA, fell 0.53% to 5,085.68 points.
The Mexican peso depreciated 1.51% to 20.7434 units per dollar and the main stock index S&P/BMV IPC, which includes the 35 most liquid companies in the local market, fell 0.78% to 47,200 points.
In Brazil, the real weakened 1.79% to 5.3474 per dollar and the Bovespa stock index fell 1.81% to 98,473.62 points.
The Peruvian currency, the sol, lost 0.92% to 3.912/3.945 units per dollar. Meanwhile, the reference of the Lima Stock Exchange yielded 0.63%, to 486.43 points.
In Argentina, the leading Argentine index S&P Merval lost 3.5%, due to profit taking, in a market that analyzes recent announcements by the new Economy Minister, Silvina Batakis, which aim to reduce the fiscal deficit and calm the markets, in the midst of a political and financial crisis.
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