The policy divergence between central banks in the Americas has intensified following last month’s interest rate hike by the United States Federal Reserve.
The US dollar index, which reflects the strength of the dollar against major global currencies, is being supported by the Fed’s move. This in turn is weakening the currencies of several countries in the Americas against the dollar at a time when they are suffering from a combination of high inflation and weak GDP growth. Countries such as Brazil and Trinidad & Tobago are already in recession, and weakening currencies are making energy products expensive for the region’s importers.
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