The dollar shoots up and the pesos fall in Latin America for fear of a global recession

The dollar shoots up and the pesos fall in Latin America for fear of a global recession

The value of the dollar remained higher on Wednesday as currencies in several Latin American countries fell due to persistent concerns of a global recession.

Currencies and most stock markets in Latin America closed sharply lower on Tuesday. Growing risk aversion stemming from fears of a global recession led investors to take refuge in dollar-denominated assets, reported Reuters.

Mexican peso at 20.6230 per dollar

The Mexican peso depreciated on Wednesday for the fourth day in a row and was trading at 20.6230 per dollar, a loss of 0.52% compared to the reference price of Reuters on Tuesday. Shortly before, the peso weakened 0.87% to 20.6950 units, a level not seen since June 16.

Chilean peso at 989.50 per dollar

The Chilean peso closed on Wednesday at historic lows with the dollar touching 1,000 pesos, while the government said it was looking for strategies to deal with the situation.

Local experts point out that the increase responds mainly to fears of a global recession, a possible new rate hike by the United States Federal Reserve and a new drop in the price of copper, Chile’s main export, which was traded in 3 $.41 per pound, the lowest value since November 2020.

Analysts agree that a local factor that influences the increase in the value of the dollar is the plebiscite that Chile will experience on September 4, when Chileans will decide whether to continue with the current Constitution or choose a new one that was recently drafted by a Convention Constitutional that would lead to great changes, which generates uncertainty, especially in investors.

Argentine peso at 255 per dollar

The Argentine peso in marginal market, fell 1.18%, to 255 per dollar, reported Reuters.

The peso fell as much as 18% at one point in the informal market on Monday, reaching 280 pesos per dollar, before recovering a bit at the end of the day, reported AP.

A local factor that also played a part in a drop in share prices was the appointment of leftist Silvina Batakis as economy minister, following the surprise resignation of her more moderate predecessor over the weekend, as the country wrestles with problems. economic, reported AP.

Colombian peso at 4,343 per dollar

While in Colombia the dollar broke another record this Wednesday by rising to 4,343 Colombian pesos.

The dollar had reached a new record on Tuesday when trading above 4,280 pesos during the day, driven by the global context in which a possible recession in the United States and the price of oil are feared, according to analysts consulted by AP.

Other currencies weaken too

Meanwhile, in Brazil, the real weakened 1.11% on Tuesday to reach 5.3886 units per dollar and lost 0.63% on Wednesday, in its fifth day of falls due to international fears and growing fiscal uncertainty. internal.

The Peruvian currency, the sol, lost 0.91%, trading at 3.892/3.895 units per dollar.

The euro, for its part, approached parity with the dollar on Wednesday, falling below $1.02, a new two-decade low, due to rising energy prices and possible shortages, which cast a long shadow over the eurozone economy.

Fear of a recession also impacted oil prices – an important generator of foreign exchange for many countries in the region -, which ended with falls of around 2% to 12-week lows, as investors are more concerned that the energy demand is affected by the global economic slowdown.

With information from Reuters and Associated Press

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