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Latam FX weaker, Brazil hit by arrest of ex


Reuters


By Susan Mathew

March 21 (Reuters) - Latin American currencies weakened on Thursday as the dollar soared, while Brazil shares fell sharply following the arrest of a former president of the country on graft charges.

A slump in the dollar's top European rivals, the euro and pound sterling, on Brexit worries helped the greenback shrug off the Federal Reserve's surprisingly more dovish stance on Wednesday.

Argentina's currency extended losses to a fourth straight session. Data showed that the economy contracted 2.5 percent in 2018, as the country slipped into recession thanks to sky high interest rates by the central bank in an attempt to curb inflation, which led to a freefall in the currency.

Argentine President Mauricio Macri, set to face a re-election battle in October, has been struggling to revive growth since the currency crisis.

Stocks in Buenos Aires slumped 1.6 percent and posted their biggest one-day drop in more than two weeks.

In Brazil, the arrest of former President Michel Temer on graft charges knocked down the real and stocks, as it threatened to delay fiscal reforms by the government seen as crucial to the economy.

The currency fell 0.4 percent, snapping a four day rally, while the benchmark Bovespa stock index declined 1.3 percent.

Temer, who was succeeded by President Jair Bolsonaro in January, was arrested on allegations that he was the leader of a "criminal organization" that diverted 1.8 billion reais ($471.62 million) in funds as part of a scheme related to a nuclear power plant complex on the Rio de Janeiro coast.

The scandal comes just as Congress is getting ready to take up a bill to overhaul the social security system. Projected savings from the Armed Forces Social Security reform proposal of 10.45 billion reais after the proposal was modified is much less than the initial 92.3 billion reais expected.

"The market was already having a negative bias after the announcement of the proposal to change the military pension system. The news of Temer's arrest only further worsened concerns about the progress of the reform," said Victor Candido, chief economist at Guide Investimentos.

E-commerce company B2W and it parent company Lojas America were the biggest losers on the benchmark. B2W announced plans to increase the number of vendors in its marketplace platform to 40,000 this year.

Meanwhile, stocks in Mexico, Chile and Colombia rose between 0.2 percent to 0.3 percent, tracking a rise in world stocks.

Key Latin American stock indexes and currencies at 2100 GMT:

Stock indexes

Latest

Daily % change

MSCI Emerging Markets

1069.68

0.11

MSCI LatAm

2835.13

-1.19

Brazil Bovespa

96729.08

-1.34

Mexico IPC

43251.19

0.22

Chile IPSA

5261.33

0.31

Argentina MerVal

34186.08

-1.61

Colombia IGBC

13370.32

0.32

Currencies

Latest

Daily % change

Brazil real

3.7931

0.12

Mexico peso

18.8515

0.05

Chile peso

669.4

-1.11

Colombia peso

3086.5

0.00

Peru sol

3.287

0.15

Argentina peso (interbank)

41.0000

-0.27






This article appears in: Politics , Stocks , World Markets , Economy




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