Broad Dollar Strength Hits Latam Currencies as Oil Jumps
Latin American currencies retreated against a strengthening dollar alongside a broad surge in energy and agricultural commodity prices.
The US dollar strengthened broadly across Latin America, inflicting the steepest losses on smaller markets. The Bolivian boliviano dropped 4.37% to 10.65 per dollar, while the Guatemalan quetzal fell 2.73% and the Paraguayan guarani declined 1.81%. Larger economies also faced pressure, with the Colombian peso depreciating 0.99% to 3,263 and the Mexican peso retreating 0.60% to 17.53. The Brazilian real slipped to 5.11.
The currency moves accompanied a broad rally in commodity prices. Brent crude rose 3.89% to $87.51 and WTI gained 3.04% to $81.35. Agricultural commodities pushed higher, with corn jumping 5.49% to 465.75 and cocoa rising 7.13% to 5,588. Sugar advanced 2.63% to 14.82, orange juice gained 3.14% to 138.00, and gold increased 0.90% to 4,021.
Equity markets reflected a risk-off sentiment driven by sharp declines in Asia. South Korea’s Kospi fell 6.37% to 6,821, Japan’s Nikkei dropped 4.03% to 64,141, and China’s CSI 300 declined 3.60% to 4,529. Hong Kong’s Hang Seng fell 1.78% to 24,562. Selling was more contained in Western markets, with the S&P 500 declining 0.59% to 7,489 and the STOXX 600 easing 0.34% to 641.53.
Latin American bourses closed mixed. Brazil’s Bovespa edged up 0.27% to 174,301.07, supported by a 2.16% gain in Petrobras to 40.75. Argentina’s Merval fell 0.89% and Chile’s IPSA dropped 0.77%. Corporate moves tracked underlying commodity prices; falling lithium dragged SQM-B down 2.12%, while a 2.33% drop in beef pushed JBS down 1.62%. Latam Airlines declined 2.01% and MercadoLibre dropped 1.96%.
The US 10-year Treasury yield fell to 4.545%, while Brazil's benchmark Selic rate remained at 14.25%. The Japanese yen weakened to 162.46 per dollar and the euro slipped to 1.1442 against the greenback. Separately, Paraguay’s trade balance swung to a $746 million surplus.
