EMERGING MARKETS-Most Latam currencies up for the week, Brazil leads gains


By Shreyashi Sanyal

Oct 9 (Reuters)Most major currencies in Latin American were set to end the week higher on Friday, with Brazil’s real leading gains after economic data through the week showed signs of improvement, while a weaker dollar also offered support.

The real BRBY, BRL= strengthened 1.3%, heading for its first weekly gain in five as data showed a pick-up in Brazil’s services sector last month. Another report showed a record reading on retail sales for August.

Investors, however, worried about Brazil’s public finances after the introduction of a new fiscal bill, called Renda Cidada, fanned fears about the government overshooting its spending limit.

FX analysts at Commerzbank said that given the uncertainty about the pandemic’sprogression and its economic impact, it is unlikely that disagreements about the consolidation of national finances will be resolved soon.

Mexico’s peso MXN= was on track for its second week of gains after the country’s government unveiled an infrastructure investment plan worth nearly $14 billion earlier in the week.

Latam currencies also got a lift from the dollar =USD, which fell to three-week lows on Friday as optimism that a deal for new U.S. stimulus would be reached, and as investors bet that Democrat Joe Biden is more likely to win the U.S. presidency and offer a larger economic package. FRX/

Analysts say a Democratic sweep could also bode well for emerging markets.

“Biden is a much more risk friendly candidate, given his international credentials for multilateralism and predictability and a far less disruptive trade policy,” said Alan Ruskin, macro strategist at Deutsche Bank.

The Colombian peso COP= also headed for weekly gains, getting a boost from rising oil prices. O/R

Chile’s peso CLP= was among the few losers for the week, as it tracked lower prices of copper, its main export, for the week. MET/L

Argentina’s peso ARS=RASLedged higher. The country’s central bank will lower the benchmark Leliq rate to 37%, from the previous level of 38%, it said on Thursday, while raising the passive repo rate 3 points to 27%, part of a wider interest rate harmonizing push.

The bank said the repo rate increase and alignment of the ‘Leliq’ rate with Treasury instruments will boost their effectiveness in influencing short-term rates.

Key Latin American stock indexes and currencies at 1450 GMT:

Stock indexes

Latest

Daily % change

MSCI Emerging Markets .MSCIEF

1125.36

0.71

MSCI LatAm .MILA00000PUS

1933.87

1.7

Brazil Bovespa .BVSP

97524.24

-0.4

Mexico IPC .MXX

38541.13

0.36

Chile IPSA .SPIPSA

3656.53

0.17

Argentina MerVal .MERV

45378.78

-0.227

Colombia COLCAP .COLCAP

1186.14

-0.02

Currencies

Latest

Daily % change

Brazil real BRBY

5.5180

1.27

Mexico peso MXN=D2

21.2002

0.81

Chile peso CLP=CL

794.9

0.42

Colombia peso COP=

3821.99

0.41

Peru sol PEN=PE

3.5677

0.34

Argentina peso (interbank) ARS=RASL

77.0900

0.05

Argentina peso (parallel) ARSB=

158

0.00

(Reporting by Shreyashi Sanyal in Bengaluru; Editing by Richard Chang)

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

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