Wednesday, 21 October 2015 00:34
SAO PAULO: Latin American currencies weakened on Tuesday on concern about the Chinese economy and a possible US interest rate hike this year, but the Brazilian real was steady after opposition lawmakers delayed filing an impeachment request against President Dilma Rousseff.
The Mexican peso dropped 0.3 percent while the Chilean peso lost 0.6 percent as fears of a hard landing of the Chinese economy resurfaced this week, knocking down commodities prices.
Also weighing on Latin American currencies were fears that US interest rates could go up this year, driving investors away from high-yielding emerging market bonds.
Brazil’s real was little changed as investors took a breather after lawmakers who oppose Rousseff said they would not file a request for her impeachment on Tuesday morning, as feared. Instead, they promised to file the request on Wednesday.
Worries about the possibility of an impeachment have added volatility to Brazil’s foreign exchange market as traders fear political instability would make it even harder for the government to balance its accounts and regain investor confidence.
“The market is cautious, waiting for news. What makes everyone nervous is that this might be the calm before the storm,” said a trader at a Sao Paulo-based bank who requested anonymity because he is not allowed to talk to the press.
Volumes were muted as traders remained on the sidelines ahead of a central bank meeting that is largely expected to leave benchmark rates stable.
