The dollar fell for the sixth day, clocking its worst losing streak in 2-1/2 years after the Fed did not use the words "ongoing increases", in a sign it was on the verge of pausing further increases in borrowing costs after the collapse of two U.S. banks.
The central bank raised its benchmark funds rate by 25 basis points, as expected. The weakness in the dollar boosted riskier emerging market assets, which have been pressured by stresses in the global banking sector and high interest rates in the developed world. Chile's peso rose 1.1%, tracking a rise in prices of its no.1 export, copper. The red metal found support against a weaker dollar, while steadying oil prices lifted the currencies of Colombia and Mexico , that rose 0.2% and 0.7%, respectively.
Peru's sol added 0.6%, while stocks in the region shed 0.1%.
The Brazilian real lagged its regional peers, shedding 0.6% as focus swung to the country's fiscal situation.
Its central bank held the Selic benchmark interest rate at 13.75% on Wednesday, for the fifth straight meeting, drawing criticism from President Luiz Inacio Lula da Silva's government and weakening bets of imminent monetary easing. Finance Minister Fernando Haddad called the central bank's statement "very concerning." Investors were left frustrated after Lula delayed announcing a proposal for new fiscal rules earlier in the week, disappointing expectations for a presentation that was initially expected by this week.
"The delay highlights key tensions within the government,
including between the left wing of Lula's Workers' Party (PT)
and the fiscally responsible faction of the government, which
includes Haddad, Vice-President Geraldo Alckmin and Planning
Minister Simone Tebet," said Elizabeth Johnson, head of TS
Lombard's Brazil research team.
"It also underscores the challenges that Lula faces as he tries to improve his approval rating at a time when the economy is slowing and global uncertainty is mounting." Argentina ordered public sector bodies to sell or exchange their holdings of eleven sovereign dollar bonds in a bid to reorganize its debt as inflation soared above 100% and its foreign reserves dropped. Latin American stock indexes and currencies at 1520 GMT:
Stock indexes Latest Daily
%
change
MSCI Emerging Markets 979.85 1.91
MSCI LatAm 2094.01 0.24
Brazil Bovespa 99795.58 -0.42
Mexico IPC 52932.30 0.73
Chile IPSA 5304.72 0.64
Argentina MerVal 225484.6 0.253
3
Colombia COLCAP 1123.06 0.16
Currencies Latest Daily
%
change
Brazil real 5.2702 -0.65
Mexico peso 18.4992 0.58
Chile peso 801.5 0.99
Colombia peso 4763.18 0.08
Peru sol 3.7619 -0.11
Argentina peso (interbank) 205.7800 -0.19
Argentina peso (parallel) 386 1.30
(Reporting by Shreyashi Sanyal in Bengaluru; editing by Grant
McCool)
