Latam FX hits seven-month low as hot US inflation lifts dollar
TLT•Latin American currencies fell to a seven-month low after hotter-than-expected US inflation data lifted the dollar and reinforced expectations for two Fed rate hikes by March. The regional currency index fell 0.8%, while the regional equities gauge dropped 1.3%.
1. Regional markets fall
An index tracking Latin American currencies fell 0.8% on Tuesday, touching its lowest level since April, while a gauge of regional equities dropped 1.3%. The dollar rose 0.6% against a basket of major currencies and Treasury yields rallied after US consumer prices rose more than expected in October.
2. Country moves and inflation
Brazil’s real briefly weakened to 5.6133 per dollar, its lowest level since August 2025, and was last down 1.4%; the country’s equity benchmark fell 0.5%. Colombia’s peso fell 0.8% to its weakest level in more than a month, and its stock index dropped 2.2%. Annual inflation in Colombia edged up to 6.3% in October, while a Reuters poll indicated the economy likely slowed in the third quarter.
3. Brazil rate outlook
Minutes from Brazil’s central bank said inflation prospects had worsened despite slowing growth, citing higher oil prices, El Niño-related pressures, the end of the 44-hour work week and a weaker currency driven by domestic policy uncertainty. Officials held the benchmark Selic rate at 13.75% last week, halting their easing cycle.
