Latam currencies mostly firm after Fed minutes

18 Aug, 2016

SAO PAULO: Most Latin American currencies strengthened on Thursday as higher oil prices and division in the Federal Reserve over whether to raise interest rates soon offset bullish comments by a US policymaker.

The minutes of the US central bank's last policy meeting released on Wednesday showed that policymakers agree that more economic data is needed before tightening monetary policy.

Many traders had expected a more direct sign that the Fed intended to increase rates later this year, which could lure capital away from higher-yielding - but riskier - emerging markets.

New York Fed President William Dudley has repeatedly pointed to strength in the US labor market, going so far as to mention a possible September hike.

A rise in prices of oil also supported demand for assets from crude exporters, with the Colombian peso strengthening over 1 percent.

The Brazilian real, however, weakened 0.6 percent, weighed down by the central bank's intervention policy.

Comments by interim President Michel Temer demonstrating concern over the real's recent strength fostered speculation that the government could aim to shield exports from currency appreciation.

The country's benchmark Bovespa stock index fell 0.4 percent on profit-taking after it touched a near two-year high the day before.

Copyright Reuters, 2016

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