LatAm FX slips ahead of US Fed verdict; Brazil on watch
TLT•Most Latin American currencies weakened ahead of the US Federal Reserve’s interest-rate decision, while Brazil’s real fell 0.3% and its benchmark stock index dropped 2.8%. Investors were watching for President Luiz Inacio Lula da Silva’s choice of finance minister.
1. Brazilian markets fall
Brazil’s real weakened 0.3% against the dollar, and the benchmark index fell 2.8%. Santander Brasil declined 4.2% after reporting a 15% drop in net profit in Brazil; Banco Bradesco lost 7% and Itau Unibanco fell 3.1%.
2. Markets await minister choice
Investors were watching for President Luiz Inacio Lula da Silva’s choice of finance minister after his reelection. Lula was under pressure to select someone who could signal fiscal discipline and reassure markets, with Vice President Geraldo Alckmin and Piauí governor Rafael Fonteles cited as possible choices.
3. Fed decision in focus
The US Federal Reserve was expected to hold interest rates steady, with Chair Kevin Warsh’s comments due to be watched for clues on the policy outlook. Mexico’s peso fell 0.1%, while Mexican equities lost 1.1%, led by a 2.8% drop in Wal-Mart de México after it missed third-quarter profit estimates. Chile’s central bank held its benchmark interest rate at 4.5%, as expected.
