In a day of turbulence and pessimism for global stock markets, the dollar in Uruguay moderated its rate of depreciation against the Uruguayan peso this Friday. However, in the accumulated of the four skillful operations that it had this week (Monday was a holiday) the US currency fell 2.9% ($1.2) in the interbank market.
The last operation of this day was agreed at $40.07, with a rebound of 0.7% compared to the $39.80 floor that had been reached the previous day. In it average of the transactions of this day, the wholesale dollar was quoted at $ 40.049%, a value 0.2% lower than Thursday, according to Bevsa.
On the blackboard the public of BROU, The dollar closed this Friday at $38.85 for purchase and $41.25 for sale.
So far in April, the nominal exchange rate in Uruguay fell 2.5% against the peso, while in the accumulated annual figure, the decrease reached 10.4%.
On the other hand, the country risk closed the week at 118 basic points and had a weekly advance of 12.4%, according to the UBI indicator of República AFAP.
Strong rise in Brazil
In Brazil, the regional reference market for Uruguay, the dollar advanced 3.7% against the real, which climbed to 4.79 units per greenback due to the signals sent by the Central Bank of Brazil and due to a potential more aggressive adjustment by of the US Federal Reserve (Fed) in its monetary tightening policy (interest rate hike) to contain inflationary pressures in the main world economy.
The Brazilian currency saw its biggest daily drop since March 2020 and it was the emerging currencies that weakened the most this Friday. According to Blomberg Line Brasil, Brazilian investors scaled back their more aggressive bets on interest rate hikes after local media reported that Central Bank President Roberto Campo Neto made more dovish comments in private meetings in Washington.
On the other hand, in Chile, The dollar saw a rise of 10.72 units since the opening to close at 837.1 Chilean pesos and reach its highest value in just over three months, according to Bloomberg. In this way, it accumulated a weekly advance of 22.4 pesos.
Analyst Marcos Correa said that these movements are linked to the expectation of higher interest rates from the Fed. Specifically, BICE’s chief economist points to the statements of Fed President Jerome Powell, who “highlighted the need to do a faster withdrawal of stimuli in the face of the worrying scenario of inflation that the country is experiencing, where in addition the activity figures in general remain quite positive”.
“Powell hinted that the monetary policy rate would rise in a range between 0.50% and even up to 0.75% at the next Fed meeting to be held on May 4,” said the Renta4 analyst, William Araya.
Another week in the red for Wall Street
The New York stock market closed this Friday a new week in red impacted by the aggressive attitude of the United States Federal Reserve (Fed) on inflation that could slow down the economy.
According to final results, the Dow Jones industrial index fell 2.82% to 33,811.40 points, registering its worst session of the month. The Nasdaq, with a mostly technology component, lost 2.55% to 12,839.29 points and the expanded S&P 500 index fell 2.77% to 4,271.80 units.
Prices continued to react to more aggressive comments from Fed Chairman Jerome Powell on inflation, who said on Thursday that a half percentage point interest rate hike “is on the table” for consideration at the meeting. of monetary policy in May.
“Today is a bad day!” Peter Cardillo of Spartan Capital summed up. “Obviously, the markets fear that interest rates will rise again after what Jerome Powell said: ‘the decline started on Thursday and accelerated on Friday,'” the analyst stressed.
Friday marked the fourth consecutive negative week for the major stock index and the third in a row for the Nasdaq and the S&P 500. All 30 Dow Jones stocks were in the red.
Art Hogan of National Securities noted “strong anxiety about the Fed’s aggressiveness.” “The market is spooked by how quickly the 10-year bond yield has risen,” Hogan said.
Interest rates on 10-year Treasury bonds remained at 2.89%, after touching 3% overnight (2.96%).
Jamie Cox of Harris Financial Group went further: “Markets are feeling very uneasy about the growing possibility of a policy error by the Fed.”
Oil closed lower
Oil prices also closed lower this Fridays, looking for a sustainable recovery at a time when the confinement in Shanghai due to the covid-19 pandemic is prolonged, which increases fears about Chinese demand for crude oil.
In New York, US West Texas Intermediate (WTI) for June delivery fell 1.65%, trading at $102.07.
Meanwhile, in London, the barrel of Brent North Sea freight for delivery in the same month fell 1.55% to $106.65.
The Chinese economic capital is facing the country’s worst recorded Covid-19 outbreak since the start of the pandemic more than two years ago. More than 17,000 new positive cases of the coronavirus were registered on Friday in that city, a figure that, however, is progressively decreasing.
“These Chinese lockdowns are a serious blow to global demand, we must bear in mind that China is the world’s leading importer of crude oil,” Han Tan, an analyst at the firm Exinity, told AFP.
It’s a toxic cocktail for oil demand “as China slows while the US raises interest rates,” added Stephen Innes, an analyst at SPI AM.
The rise in interest rates in the United States is intended to curb inflation, but it weighs on economic activity and, therefore, on oil consumption.
With Diario Financiero and AFP