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Brazil’s real dropped on Friday as

unemployment jumped to record levels and a spike in coronavirus

deaths dented sentiment, although expectations of interest rate

hikes and a weak dollar led the currency to gain most among its

Latin American peers in April.

The real dropped 1.3% after unemployment

soared to a record 14.4 million in the three months through

February, statistics agency IBGE said.

Brazil on Thursday became the second country to pass 400,000

COVID-19 deaths after the United States, and experts warned the

daily toll could remain high for several months due to slow

vaccinations and loosening social restrictions.

“The COVID outbreaks in India and Brazil and the recent slip

in global mobility might inject some caution or pause the risk

rally, especially if data starts to miss expectations,” said

Mark McCormick, global head of FX strategy at TD Securities.

However, the real was set to record its highest monthly gain

since November last year, led by a weakening dollar, strong iron

ore prices and as expectations of high inflation pointed to more

interest rate hikes.

MSCI’s index of Latin American currencies

was down 0.8% on Friday, but gained for a fifth straight week,

and rose nearly 3.3% this month, its best performance since

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December last year.

Latam stocks gained 4.4% in April in their

best month since December.

Mexico’s peso dropped 0.6%, while a jump in economic

growth in the first quarter based on a preliminary estimate from

the national statistics agency helped prevent further

losses.

The Colombian peso dropped 0.3% ahead of a central

bank meeting later on Friday when the bank is expected to leave

its benchmark interest rate unchanged as part of an expansive

monetary policy while also evaluating the country’s economic

recovery and inflationary outlook.

Most other Latin American currencies also dropped against

the dollar with the Chilean and Argentine pesos

down 0.5% and 0.1% respectively, while the Peruvian sol

eased 0.2%

Peruvian front-running left-wing presidential candidate

Pedro Castillo was rushed to a clinic in Lima on Thursday due to

a “respiratory” illness, forcing him to suspend campaigning, the

candidate’s party said on social media.

The dollar index, a measure of the greenback’s value

against a basket of its major peers, rose 0.4%, leaving it set

to end the week flat, although still down 2.56% for the month as

a whole.

Key Latin American stock indexes and currencies:

Latest Daily % change

MSCI Emerging Markets 1350.63 -1.02

MSCI LatAm 2401.02 -1.3

Brazil Bovespa 119476.88 -0.49

Mexico IPC 48501.92 -0.81

Chile IPSA 4551.42 0.2

Argentina MerVal 49643.43 -0.842

Colombia COLCAP 1270.12 -0.62

Currencies Latest Daily % change

Brazil real 5.4026 -1.27

Mexico peso 20.1540 -0.57

Chile peso 712.5 -0.51

Colombia peso 3723.25 -0.27

Peru sol 3.7928 -0.21

Argentina peso 93.5500 -0.05

(interbank)

(Reporting by Shashank Nayar in Bengaluru; Editing by Ken

Ferris)

In-depth reporting on the innovation economy from The Logic, brought to you in partnership with the Financial Post.

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