Deals
Correlation Breakdown as Asia, Latin America Diverge: Currencies
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Asian currencies that once moved in lockstep with their Latin American peers are diverging by the most ever as China attracts investors to the region without boosting commodities, the main exports for Brazil and Chile.
The four-week correlation between the currencies of the two regions reached minus 1 last month, meaning they always move in the opposite direction, according to index data compiled by Bloomberg and JPMorgan Chase & Co. As recently as May, the correlation was plus 1 as the indexes moved in tandem. The Chinese yuan has climbed to 19-year highs amid gains in retail sales and the South Korean won reached the strongest since 2011, while Brazil’s real and the pesos in Mexico, Chile and Colombia weakened over the past two months.