Colombia peso slips after local rate cut; most currencies set for monthly gains
* Colombia c.bank cuts rates by 50 bps * Brazil private economists forecast two 50-bps hikes this year * Chile’s president proposes 2.7% spending increase in 2025 budget * Mexico’s president-elect Sheinbaum to take office on Tuesday * Latam FX down 0.3%, stocks down 1% (Updated at 3:30 p.m. ET/ 1930 GMT) By Ankika Biswas and Shashwat Chauhan Sept 30 (Reuters) – Colombia’s peso slipped on Monday after the country’s central bank opted for a modest interest rate cut, while an index tracking Latin American currencies was on course for its biggest monthly advance in 10 months, riding on a metal prices rally. The Colombian peso weakened 0.4% against the dollar after its central bank cut the benchmark interest rate by 50 basis points to 10.25%, a moderate cut as policymakers responded to local inflationary pressures despite international relaxations in borrowing costs. “Risk premiums in LatAm have increased, with Colombia seeing a notable rise due to falling oil prices and challenging fiscal conditions, despite the rate cut and further reductions expected from the US Fed,” said Andres Abadia, chief LatAm economist at Pantheon Macroeconomics. “Elevated geopolitical risk and increased domestic fiscal uncertainty have been significant factors preventing a 75bp rate cut.” The Colombian decision followed a 25-bps rate hike by Brazil and a 25-bps cut by Mexico this month. A survey showed Brazil’s private sector economists now project a more restrictive path for interest rates, with two 50-basis-point hikes expected this year and higher borrowing costs next year. Brazil’s real was down 0.4% on the day, but was the top Latin American currency performer for the month with a near 3% jump against the greenback. Data from Brazil showed the country’s public sector posted a larger-than-expected deficit in August, driven by a mismatch between central government revenues and expenditures. The MSCI index for Latam currencies was set for its best month since last November. The stock index dipped 1% on Monday, though was set for quarterly gains. The strength in Latam asset classes has been fueled by optimism around a Federal Reserve interest rate cut and soaring metal prices on the back of top consumer China’s stimulus measures that have shored up the metals demand outlook. Top copper producers Chile’s peso and Peru’s sol also enjoyed monthly gains on the back of the recent rally in the red metal’s prices. Chile’s government is proposing a 2.7% annual increase in its 2025 budget, President Gabriel Boric said, adding plans to boost pensions, healthcare and focus on increasing national security. Mexico’s peso was up 0.2% in choppy trading. Incoming President Claudia Sheinbaum will take office on Tuesday. Meanwhile, Argentine President Javier Milei intends to shake up the country’s mid-term legislative elections next year, as the country battles its worst economic crisis in decades. Key Latin American stock indexes and currencies: MSCI Emerging Markets 1168.74 -0.49 MSCI LatAm 2237.57 -0.99 Brazil Bovespa 132124.13 -0.46 Mexico IPC 52567.99 -0.4 Chile IPSA 6490.72 -0.61 Argentina Merval 1694669.2 -1.916 7 Colombia COLCAP 1311.64 -0.69 Brazil real 5.4555 -0.42 Mexico peso 19.6713 0.16 Chile peso 898.5 0.13 Colombia peso 4194.89 -0.41 Peru sol 3.6923 0.14 Argentina peso (interbank) 968.5 -0.154878678 Argentina peso (parallel) 1215 2.469135802 (Reporting by Ankika Biswas and Shashwat Chauhan in Bengaluru; Editing by Ed Osmond and Jamie Freed)
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Business NewsNewsColombia peso slips after local rate cut; most currencies set for monthly gains
