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EMERGING MARKETS-Chile peso eases 1% as protests rage on; Latam FX slips

Credit: REUTERS/RODRIGO GARRIDO

The Chilean peso shed more than 1% on Tuesday amid prolonged civil unrest despite some government concessions, while growing uncertainty about a U.S.-China trade deal kept other Latin American currencies directionless in subdued trading.

By Sagarika Jaisinghani and Shreyashi Sanyal

Nov 19 (Reuters) - The Chilean peso shed more than 1% on Tuesday amid prolonged civil unrest despite some government concessions, while growing uncertainty about a U.S.-China trade deal kept other Latin American currencies directionless in subdued trading.

Chile's currency CLP= and stocks .SPIPSA resumed their slide after a brief reprieve on Friday, when lawmakers agreed to hold a referendum to replace a dictatorship-era constitution. The peso, which had soared nearly 4% on the news, is still on course for its worst month in more than a year.

"People are just being cautious because we haven't seen this kind of social unrest in Chile and it is worrisome (since) we don't know where things are going to go from here," said Christian Lawrence, senior market strategist, Latam FX at Rabobank in New York.

The Mexican peso MXN=, Argentine peso ARS= and Peruvian sol PEN= traded lower against a flat dollar, hit by trade jitters after a report on Monday that Beijing was pessimistic about a deal with Washington on rolling back tariffs. FRX/

An index of Latin American currencies .MILA00000CUS dipped more than half a percent and was on course for its worst day in a week.

Brazil's real BRL= firmed slightly to 4.21 to the dollar after hitting a record low in the previous session as the central bank's president, Roberto Campos Neto, said inflation was low and stable, and that the country's foreign exchange reserves were "quite high."

On Monday, the currency crossed a key mark at 4.20 to the dollar, a level last breached in August, when the central bank was prompted to intervene for the first time in over a decade.

The bank has since sold dollars in the spot market almost daily to shore up the real, sparking a debate about its intervention policy. It said on Tuesday it would sell up to $600 million through reverse currency swaps, but later canceled the auction ahead of a market holiday on Wednesday.

"From a purely fundamental perspective, the real is undervalued at the moment, but the key thing is that it rose above 4.20," said Christian Lawrence, senior market strategist, LatAm FX at Rabobank in New York.

Brazil's stock index .BVSP was down 0.4% in subdued trading, weighed down by financial stocks, while Mexico shares .MXX were up marginally after a market holiday on Monday.

Key Latin American stock indexes and currencies at 1543 GMT:

Stock indexes

Latest

Daily % change

MSCI Emerging Markets .MSCIEF

1056.59

0.42

MSCI LatAm .MILA00000PUS

2653.91

-0.95

Brazil Bovespa .BVSP

105841.81

-0.4

Mexico IPC .MXX

43443.44

0.12

Chile SPIPSA .SPIPSA

4758.42

-1.16

Argentina MerVal .MERV

30905.51

-2.97

Colombia IGBC .IGBC

-

-

Currencies

Latest

Daily % change

Brazil real BRBY

4.2129

-0.18

Mexico peso MXN=D2

19.3662

-0.28

Chile peso CLP=CL

786.9

-1.82

Colombia peso COP=

3432.39

0.19

Peru sol PEN=PE

3.3788

-0.20

Argentina peso (interbank) ARS=RASL

59.7000

-0.03

(Reporting by Sagarika Jaisinghani and Shreyashi Sanyal in Bengaluru)

((Sagarika.Jaisinghani@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 6749 0613;))

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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