Latin American Currencies Stole the Emerging Market Show This Week

Bloomberg — A gauge for developing-market currencies is on track for its best week since July, boosted by gains in high-yielding Latin America foreign exchange. Emerging European currencies, meantime, trimmed some losses on Friday after a turbulent week for the region.

Currencies from Brazil, Colombia and Mexico — countries with some of the highest interest rates in the world — gained as appetite for riskier assets grew supported by US inflation data and signs of economic stabilization in China. The Peruvian sol bucked the trend after the central bank kicked off its easing cycle on Thursday as expected.

VIEW +

Chile’s Finance Minister Says Job of Stabilizing the Economy Is Almost Done

Mario Marcel, the Cambridge University-trained minister, is trying to guide Chile out of an economic slowdown that was engineered to rein in torrid demand and smother the fastest inflation since 1992

Currencies from Hungary, Czech Republic, Bulgaria and Romania were the biggest gainers for the session on Friday, trimming some of their weekly loss. The region’s currencies were dragged down by the euro after the European Central Bank’s decision to raise borrowing costs on Thursday, underscoring concerns over growth.

“The policy response is likely to be hold and hope, but with a risk that if inflation conditions don’t cool, a policy-induced recession may be required,” said Simon Harvey, head of FX analysis at Monex Europe in London.

VIEW +

Investor Anxiety Rises as Mexico’s AMLO Shifts Away from Austerity

When Andrés Manuel Lopez Obrador unveiled a budget plan last Friday that would result in the nation’s largest fiscal deficit since 1988, it sparked some angst on Wall Street

That would hurt Eastern European currencies the most among emerging markets, given their high economic exposure to the common currency area, Goldman Sachs Group Inc. said in a note.

Poland’s zloty resumed its free-fall Friday after a respite following a senior official’s pledge Wednesday to intervene in the currency market.

Zambian President Hakainde Hichilema will meet Xi Jinping in Beijing, while an update from Moody’s Investors Service on Senegal’s credit rating is expected at market close following recent political turbulence.

With assistance from Philip Sanders.

Read more at Bloomberg.com