“Flight to quality” deepens run against LatAm currencies
Those following Latin America might have got used to headlines about devaluations in Argentina or in hyperinflation-ravaged Venezuela, but the run against the continent’s currencies is now becoming more generalized, as weaknesses are exposed amid an global investors’ “flight to quality”.
The Brazilian real lost 15 percent of its worth since the start of the year, trading at 4.67 per dollar today from 4.03 in early January, when it broke a psychological barrier of 4 reals per dollar below which it had always held since 2002.
Things are not too different for the Chilean peso, which lost 10 percent since the turn of the year and now trades at 825 per dollar, part of a much more spectacular decline since political protests intensified in the country. A year ago, the Chilean peso was trading at 585 per dollar, an incredible difference for a country with very low inflation.