EMERGING MARKETS-Latam FX gains, Mexican peso up on optimism about investment drive


By Shreyashi Sanyal

Oct 7 (Reuters)Latin American currencies bounced on Wednesday, with Mexico’s peso leading gains as the country’s newly announced investment push was viewed as positive for its ailing economy.

The peso MXN= jumped 1.5% against the dollar, as investors were optimistic after the government presented an infrastructure investment plan worth almost $14 billion (297 billion pesos) on Monday. The package, which is mostly privately financed, is the first concrete sign of a renewed readiness by corporate bosses to invest under President Andres Manuel Lopez Obrador.

“After the government had so far seemed rather tight-fisted, referring to the difficult public finances, it is now going to support the economic recovery with the implementation of infrastructure projects,” said Elisabeth Andreae, FX and emerging markets analyst at Commerzbank.

“As far as the choice of the projects is concerned, government and the president seem intent on preventing a repetition of past mistakes and to regain lost investor confidence.”

Mexico’s currency has fared better than those of regional peers in recent months, in part due to the strong economic connection with the United States, its main trading partner, but the peso remains exposed to volatility leading up to the Nov. 3 U.S. elections.

In Brazil, central bank president Roberto Campos Neto said economic recovery is only partial, with sectors most affected by social distancing still “depressed,” and also repeated policymakers’ intention not to reduce monetary stimulus. The real BRBY, BRL= fell after rising earlier in the session.

Market participants waited for the government to reveal later in the day how it plans to fund its new social welfare program Renda Cidada, with focus on how the proposal will respect the administration’s key fiscal spending cap rule.

Chile’s peso CLP= rose 0.5% after central bank data showed a trade balance of $886 million in September, boosted by an 8.3% surge in the value of copper exports.

Copper prices rose on Wednesday on expectations of improving economic growth and stronger demand for industrial metals. MET/L

Stocks on Wall Street traded higher, even as President Donald Trump broke off negotiations with Democrats on more economic aid on Tuesday. .N

Trump’s abrupt call to end stimulus talks also hit oil prices, along with a larger than expected rise in U.S. crude inventories. Crude exporter Colombia’s currency COP= fell against the dollar.

Later in the day, Peru’s central bank will announce its decision on interest rates, with analysts expecting rates to be held steady.

Key Latin American stock indexes and currencies at 1411 GMT:

Stock indexes

Latest

Daily % change

MSCI Emerging Markets .MSCIEF

1107.87

0.49

MSCI LatAm .MILA00000PUS

1846.87

-1.66

Brazil Bovespa .BVSP

95908.67

0.31

Mexico IPC .MXX

37323.82

1.02

Chile IPSA .SPIPSA

3612.85

-0.24

Argentina MerVal .MERV

0.00

Colombia COLCAP .COLCAP

1167.17

-0.15

Currencies

Latest

Daily % change

Brazil real BRBY

5.6295

-0.58

Mexico peso MXN=D2

21.4970

1.04

Chile peso CLP=CL

794.5

0.47

Colombia peso COP=

3845.3

-0.37

Peru sol PEN=PE

3.5878

-0.14

Argentina peso (interbank) ARS=RASL

77.0800

0.00

Argentina peso (parallel) ARSB=

148

1.35

(Reporting by Shreyashi Sanyal in Bengaluru)

(([email protected]; +1 646 223 8780; +91 961 144 3740; Twitter: https://twitter.com/s_shreyashi;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Source Article