MercoPress. South Atlantic News Agency

Argentina's Peso falls 1.42% on Friday, despite a weaker dollar following Fed's Powell speech

In earlier trading the Peso touched a record intraday of low 31 to the greenback as the local Merval stock index fell 3.9%

Argentina’s peso currency fell 1.42% to a record low close of 30.92 per dollar on Friday, weighed down by an economy slipping into recession, high inflation and uncertainty driven by corruption investigations.

 Earlier in the day the peso touched a record intraday of low 31 to the greenback as the local Merval stock index fell 3.9%. The peso has lost 39.68% of its value against the dollar so far in 2018, making it one of the world’s worst-performing currencies this year.

Other Latin American currencies jumped on Friday after Federal Reserve Chairman Jerome Powell expressed no surprises in a closely watched speech, suggesting a slow-and-steady pace for U.S. interest rate hikes is still in order.

But confidence in Argentina has been shaken by a corruption scandal in the construction sector that analysts expect will damage an economy already hit by 31% inflation and a drought that crippled harvesting of soy, the country’s main cash crop.

The U.S. dollar weakened as Powell said a gradual approach of raising rates remains appropriate to protect the U.S. economy and keep job growth as strong as possible with inflation under control.

While most Latin American currencies firmed on the news, the big regional exception was the Argentine peso. A slow path of U.S. rate hikes would boost the allure of higher-yielding, emerging market assets. Accordingly, currencies from Mexico, Chile and Colombia firmed between 0.2% and 1.3%.

The Chilean and Colombian pesos led the regional currencies rally, tracking higher prices of key commodity exports copper and crude oil. In Washington, talks between U.S. and Mexican officials to update the more than two-decade-old North American Free Trade Agreement, are set to continue through the weekend, as negotiators say they are close to resolving outstanding issues between the two countries.