Argentina's peso jumped on Thursday after a bruising sell-off in the past three sessions and most other Latin American currencies stabilized amid receding worries about a recession in the world's largest economy. The Brazilian real jumped as much as 1% before easing slightly to trade at 4.0286 per dollar after the central bank announced its decision to sell dollars in the spot currency market for the first time in over a decade.
The Brazilian central bank said on Wednesday it would sell up to $550 million daily in the spot market along with reverse swaps of the same value, in response to rising demand for liquidity. The Mexican peso edged higher ahead of the central bank's decision on interest rates, due at 2:00 p.m. EDT (1800 GMT). Analysts expect policymakers to hold rates at 8.25%, according to a Reuters poll, although they are expected to adopt a dovish tone pointing to impending rate cuts.
Latin American currencies and stocks lost steam on Wednesday amid a slump in global financial markets after moves in US bonds signaled that the world's biggest economy will tip into recession in the wake of a prolonged trade dispute with China. Easing some of those fears was data that showed US retail sales rose more than expected last month, suggesting fairly robust consumer spending.
However, mixed reports on the US-China trade front kept investors wary. News that China will retaliate against the latest US tariffs hit global stocks, which turned around after a Beijing official said China hoped the two sides will come to deal.
The Argentine peso opened stronger after a three-day rout in the currency on investor worries about the country's return to populist policies after business friendly President Mauricio Macri fared worse than expected in this week's presidential primaries.
The peso jumped nearly 4.7% to trade at $57.5 per dollar after shedding more than 24% over the past three days even as Macri announced a series of welfare subsidies and tax cuts for lower-income workers.
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