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The reverse after days of positive performance comes in response to renewed speculation that the US Federal Reserve could indeed raise interest rates before the end of the year.
The Brazilian real dipped 0.74 per cent, while the Mexican and Chilean peso fell 0.14 and 0.64, respectively.
Although the Federal Open Market Committee (FOMC) voted on Wednesday to keep interest rates at historic low rates of zero to 0.25 per cent, it appeared to change its tone regarding the possibility of a hike by the end of December.
“The committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced but is monitoring global economic and financial developments,” an FOMC statement on Wednesday said.
Last month, the FOMC and Fed chief Janet Yellen said monetary policy would be accomodative due to low inflation rates, a high US dollar, and fears over China’s slowing GDP growth rate.
But in that month, the pressures on interest rates appear to have eased off as the the Chinese economy regains ground lost over the summer.
China’s Central Bank cut interest rates last week amid investors’ speculation that the government would increase its use of stimulus tools.
Although it was down 0.7 per cent for the week so far the Shanghai Composite Index (SHCOMP) closed up 0.4 per cent on Thursday.
All eyes will now be on announcements of economic policy from the Communist Party’s annual plenum, which ended on October 29, for any indication of further government intervention in local markets and/or quantitative easing.
Meanwhile, Brazil’s Central Bank said on Thursday it would keep benchmark interest rates steady at 14.25 per cent, but it expressed concern over President Dilma Rousseff’s efforts to lower the budget deficit and control rampant inflation.
The BRICS Post with inputs from Agencies