EMERGING MARKETS-Brazil's real surges on iron ore prospects, catchup trade

Credit: REUTERS/PILAR OLIVARES

By Ambar Warrick

April 22 (Reuters) - Brazil's real raced ahead in catch-up trade on Thursday, with a spike in Chinese steel prices also providing support, while Chile's peso came off three-month highs, tracking an initial dip in copper prices.

The real BRBY jumped 1.5% after a holiday on Wednesday. Most other Latin American currencies had firmed then, owing to a weaker dollar in the light of falling U.S. treasury yields. USD/

The currency was supported by Chinese steel prices jumping to record highs, which pointed to robust demand for iron ore- a major component of steel making, and a top export from Brazil to China. IRONORE/

Still, a damaging new wave of COVID-19 infections has held back gains in emerging market currencies, with most Latam units following suit. Regional currencies traded lower for the day.

Brazil, in particular, has been dealing with record-high infections and deaths, which have spurred lockdowns across several states to contain the virus.

Industrial confidence fell in April for a fourth month, pointing to continued pressure on the economy from the pandemic.

"Rising inflation, cost/input push pressures, supply chain disruptions, renewed lockdowns given the deterioration of the COVID picture and the unsettled policy/political backdrop are sapping both consumer and business confidence," Goldman Sachs analysts wrote in a note.

Chile's peso CLP= fell about 0.8%, coming off three month peaks as the prices of copper- the country's top export- stalled just below 10-year highs. MET/L

Peru's sol PEN= plummeted 1.1% to near record-low levels, extending losses into a fifth straight session after a survey put socialist Pedro Castillo in pole position to win the presidency in a second round ballot set for June.

Mexico's peso MXN= was flat, as inflation rose faster-than-expected in the first half of April to its highest level in more than three years and far surpassing the central bank's target range.

Still, the peso is likely to be supported by steady interest rates, which the central bank is expected to keep at 4% for longer than expected.

Latam stocks .MILA00000PUS rose in early trade, supported by Brazil's Bovespa index .BVSP adding 0.5%.

Key Latin American stock indexes and currencies:

Latest

Daily % change

MSCI Emerging Markets .MSCIEF

1340.56

0.28

MSCI LatAm .MILA00000PUS

2406.77

0.44

Brazil Bovespa .BVSP

120663.20

0.5

Mexico IPC .MXX

48804.60

-0.13

Chile IPSA .SPIPSA

4935.10

0.07

Argentina MerVal .MERV

-

-

Colombia COLCAP .COLCAP

1305.05

-0.01

Currencies

Latest

Daily % change

Brazil real BRBY

5.4965

0.93

Mexico peso MXN=D2

19.8860

-0.07

Chile peso CLP=CL

703.7

-0.82

Colombia peso COP=

3620.1

-0.21

Peru sol PEN=PE

3.7497

-1.09

Argentina peso (interbank) ARS=RASL

93.0700

-0.03

(Reporting by Ambar Warrick in Bengaluru Editing by Bernadette Baum)

((Ambar.Warrick@thomsonreuters.com; +91-80-6182-2837; Reuters Messaging: ambar.warrick.thomsonreuters.com@reuters.net; Twitter: @AmbarWarrick))

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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