Thursday, October 5, 2023

Currencies rise on more optimism about US debt ceiling talks

by Frillon Romero

SANTIAGO (Reuters) – Most Latin American currencies closed with gains on Friday, amid a modest global drop in the dollar and lower spreads in riskier assets as the United States reported progress in talks to raise the public debt ceiling. .

* Democrats in the White House and Republicans in Congress are finalizing a deal on Friday that would raise the US debt ceiling to $31.4 trillion for two years, while limiting spending across the board except for the military and veterans , according to a US official.

* However, rising expectations of a possible fresh hike in interest rates by the Federal Reserve after the latest data from the world’s leading economy added to the uncertainty quotient in the markets.

* US consumer spending rose more than expected in April, boosting the economy’s growth outlook for the second quarter, and inflation rose, potentially prompting the Federal Reserve to keep interest rates high for a while.

* The dollar index, which measures the greenback against a basket of six major currencies, fell about 0.03% but held near a two-month high.

* The Mexican peso was trading at 17.6279 against the dollar, up 1.23% against Thursday’s Reuters reference price. During the week, it added a return of 0.43%.

“The debt ceiling issue remains one of the operators’ priorities and optimism has increased regarding the conclusion of a deal between Democrats and Republicans,” the CI Banco firm said in an analysis note.

* The main stock index S&P/BMV IPC, which includes the 35 most liquid companies in the Mexican market, rose 0.39% to 53,952.42 units.

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* Meanwhile, Mexico’s economy grew slightly less than previously estimated in the first quarter amid a weaker performance from agricultural activity, which was offset by services and manufacturing.

* The Brazilian real rose 0.91% to 4.9900 units per dollar, while the Bovespa index rose 0.64% to 110,762.49 points on the B3 stock exchange in Sao Paulo.

* Brazil is about to enter a cycle of low interest rates, Finance Minister Fernando Haddad said on Friday, noting that inflation is “more behavioral” and the exchange rate is stable at a lower level than at the start of the government.

* Similarly, the Chilean peso gained 1.05% to 799.80/800.10 per dollar, but during the week, declined 0.41%. Meanwhile, the Santiago Stock Exchange’s flagship index, IPSA, fell 0.2% to 5,609.21 units.

* The Colombian peso rose 1.22% to 4,438 units per dollar on Friday, up 2.1% for the week. In the stock market, the MSCI COLCAP stock index closed at 1,100.97 points with a gain of 0.22%.

* The Peruvian sol ended the session down 0.54% at 3.6750/3.6770 units per dollar. While the reference of the Lima Stock Exchange rose by 0.58% to 535.81 points.

* Argentine markets were closed on Friday for a local holiday.

(Reporting by Froilan Romero. Additional reporting by Nelson Boccanegra in Bogota; Editing by Manuel Farias)

Nation World News Desk
Nation World News Desk
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