EM currencies eye sharpest one-day drop in almost 3 years
Dollar gains on strong U.S. job growth
Brazil's industrial production drops in 2022
Chile copper production falls in December
Latam FX off 2.4%, stocks down 3.1%
Updates prices, adds details
By Amruta Khandekar
Feb 3 (Reuters) - The emerging market currencies index was on track for its biggest daily percentage drop in nearly three years on Friday, with most Latin American currencies at session lows after solid U.S. job growth data boosted the dollar.
MSCI's emerging market currencies index .MIEM00000CUS was down 1.1% at 1938 GMT, and was headed for its worst daily performance since March 2020.
The U.S. Labor Department's highly anticipated monthlyreport showed nonfarm payrolls surged by 517,000 jobs in January. Economists in a Reuters poll had forecast a gain of 185,000.
The data, which came on the heels of what were seen as largelydovish messages from the Federal Reserve and some other central banks earlier this week, spurred concerns about interest rates staying elevated for longer than expected, boosting the dollar =USD.
"It's definitely questioned the need for the Fed to ease policy later in the year, so that understandably has weighed on emerging market currencies," said Chris Turner, global head of markets at ING.
"I think a modest correction in emerging market currencies is understandable. I don't think we need to see a really sharp sell-off (going forward), not unless U.S. price pressures pick up."
The Latin American currencies index .MILA00000CUS was down 2.4% on Friday, a day after touching multi-year highs.
The Brazilian real was down 1.8% against the dollar after Brazilian President Luiz Inacio Lula da Silva issued his latest threat to the autonomy of the country's central bank on Thursday, a day after the central bankfloated the possibility of keeping interest rates at a six-year high for longer than expected.
Lula's criticism of the central bank also weighed on stocks in Brazil .BVSP, which fell 1.1%, dragging the Latam stocks index .MILA00000PUS down 3.1%.
Industrial production inLatam's largest economy fell 0.7% in 2022, government statistics agency IBGE said on Friday.
The currencies of Mexico MXN= and Colombia COP=, both oil exporters,dropped 1.6% and 2.3%, respectively.
Chile's peso CLP= fell 2% as data showed total copper production in the country, the world's largest producer of the metal, slumped 0.5% to 495,800 tonnes in December. The Peruvian solPEN= was down 0.7%.
Meanwhile, broader EM stocks .MSCIEF fell 1.1% and were on track for their first weekly decline in 2023, boggeddown by declines in Chineseequities amid concerns aboutthe country's economic recovery.
In India, financial contagion fears spread as the Adani Group's crisis worsened, with ratings agency Moody's warning the conglomerate may struggle to raise capital and S&P cutting the outlook on two of its businesses.
Elsewhere, the Russian rouble RUBUTSTN=MCX fell back against the U.S. dollar as the finance ministry said it would sell $2.3 billion worth of foreign currency in the month ahead to help plug a deficit in the state budget.
Key Latin American stock indexes and currencies at 1938 GMT:
Stock indexes | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1034.09 | -1.1 |
MSCI LatAm .MILA00000PUS | 2245.10 | -3.07 |
Brazil Bovespa .BVSP | 108872.23 | -1.15 |
Mexico IPC .MXX | 53998.73 | 0.23 |
Chile IPSA .SPIPSA | 5314.63 | 0.02 |
Argentina MerVal .MERV | 241576.37 | -2.925 |
Colombia COLCAP .COLCAP | 1266.72 | 0.53 |
Currencies | Latest | Daily % change |
Brazil real BRBY | 5.1382 | -1.82 |
Mexico peso MXN=D2 | 18.9479 | -1.60 |
Chile peso CLP=CL | 794.6 | -2.04 |
Colombia peso COP= | 4694.75 | -2.32 |
Peru sol PEN=PE | 3.8226 | -0.73 |
Argentina peso (interbank) ARS=RASL | 188.0000 | -0.22 |
Argentina peso (parallel) ARSB= | 375 | 0.80 |
Reporting by Amruta Khandekar in Bengaluru; Editing by Paul Simao and Leslie Adler
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
