EMERGING MARKETS-Brazilian real, Chile's peso drag Latam FX amid rate cut worries

Credit: REUTERS/Ricardo Moraes

By Ankika Biswas, Amruta Khandekar and Shristi Achar A

Aug 7 (Reuters) - Major Latin American currencies fell on Monday against a steady dollar, with Brazil's real resuming its downtrend on worries over a deeper monetary policy easing, while Chile's peso fell for the sixth straight day.

The MSCI index for Latam currencies .MILA00000CUS fell 0.6% by 1910 GMT on Monday, extending the last week's sharp declines driven by the start of interest rate cuts in the region.

The dollar =USD was steady ahead of inflation data from the United States and China due later in the week following Friday's losses driven by a mixed U.S. jobs report.

The Brazilian real BRL=, BRBY dropped 0.5%. Private economists forecast a deeper policy easing this year and the next after a larger-than-expected 50-basis-point rate cut last week, a central bank poll showed.

Inflation in Brazil, as measured by the IGP-DI price index, fell 0.4% in July from a 1.45% gain in June, with Citi analysts saying this suggests near-term downside pressure to consumer prices.

Minutes of Brazil's July policy meeting are due on Tuesday, with Goldman Sachs analysts expecting the central bank to stress the message behind policy easing and also the need to maintain "contractionary" stance until disinflationary process consolidates and inflation expectations anchor around targets.

Chile's peso CLP=C slipped 0.7 pct, as the top copper producer's currency tracked lower prices for the metal.

Copper exports in Chile, which also cut interest rates sharply in recent days, reached $3.36 billion in July, down 2.8% from a year earlier.

Diverging monetary policy approaches between Chile and the United States produces a weaker peso currency, Chilean Finance Minister Mario Marcel said on Monday.

BlackRock Investment Institute on Monday downgraded emerging market local currency debt to "neutral" from "overweight", citing pressure from rate cuts.

Peru's sol PEN=PE was up flat in the run up to its interest rate decision on Thursday.

Bucking the trend, the Mexican peso MXN=D2 gained 0.3%, with markets awaiting a monetary policy decision on Thursday when the central bank is widely seen staying on hold.

The country's national statistics agency said consumer confidence improved in July.

Colombia's peso COP= edged up 0.3%, with the stock market .COLCAP shut on Monday due to a public holiday.

The MSCI index for Latam stocks .MILA00000PUS slipped 0.6% to a three-week low.

Elsewhere, the Romanian leu EURRON= was down 0.1% against the euro after the country's central bank kept its benchmark interest rate on hold at 7.00% as expected.

Key Latin American stock indexes and currencies at 1910 GMT:

Stock indexes


Daily % change

MSCI Emerging Markets .MSCIEF






Brazil Bovespa .BVSP



Mexico IPC .MXX






Argentina MerVal .MERV





Daily % change

Brazil real BRBY



Mexico peso MXN=D2



Chile peso CLP=CL



Colombia peso COP=



Peru sol PEN=PE



Argentina peso (interbank) ARS=RASL



Argentina peso (parallel) ARSB=



(Reporting by Ankika Biswas, Amruta Khandekar and Shristi Achar A in Bengaluru; Editing by Aurora Ellis and Alistair Bell)


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

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