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EMERGING MARKETS-Latam FX firms on rate cut hopes, Brazil's real outperforms

Credit: REUTERS/PILAR OLIVARES

Rising bets on an interest rate cut by the U.S. Federal Reserve boosted Latin American stocks and currencies, with Brazil's real jumping to an over three-month high on optimism over the government's pension reform.

July 4 (Reuters) - Rising bets on an interest rate cut by the U.S. Federal Reserve boosted Latin American stocks and currencies, with Brazil's real jumping to an over three-month high on optimism over the government's pension reform.

The real BRL= firmed at 3.7969 per dollar, its strongest level since March 22, with Brazil's special congressional committee set to vote on an amended pension reform bill presented by coordinator Samuel Moreira.

Lower House Speaker Rodrigo Maia said earlier this week the committee will vote on plans to generate savings of around 940 billion reais ($244 billion) over the next decade.

"We expect the reform to be approved by the Chamber of Deputies in August, with total expected fiscal savings of 750 billion reais in ten years," Credit Suisse analysts wrote in a note.

Signs of progress in the pension reform has eased investors nerves around Brazil as economists slashed their 2019 growth outlook in recent weeks amid high unemployment and a global slowdown.

The Bovespa .BVSP shot to another record, helped by banking shares such as Banco Bradesco SA BBDC4.SA and Itau Unibanco Holding SA ITUB4.SA. Shares of state-run oil firm Petrobras PETR4.SA gained despite a dip in oil prices

With U.S. markets closed for its Independence Day holiday, risk assets elsewhere rallied on hopes the Fed will cut interest rate as early as July after soft U.S. economic data and the nominated European Central Bank chief Christine Lagarde will keep to a dovish policy path, sending benchmark debt yields tumbling and the dollar down. FRX

The Mexican peso MXN= rose for a fourth day in a row, while the Chilean peso CLP= and the Colombian peso COP= also made slight gains.

Latin American stock indexes and currencies at 1319 GMT

Stock indexes

Latest

daily % change

MSCI Emerging Markets .MSCIEF

1064.37

0.45

MSCI LatAm .MILA00000PUS

2911.97

1.57

Brazil Bovespa .BVSP

103272.41

1.2

Mexico IPC .MXX

-

-

Chile IPSA .SPIPSA

-

-

Argentina MerVal .MERV

-

-

Colombia IGBC .IGBC

-

-

Currencies

Latest

daily % change

Brazil real BRBY

3.7997

0.69

Mexico peso MXN=D2

18.9849

0.13

Chile peso CLP=CL

677.13

0.10

Colombia peso COP=

3190.77

0.13

Peru sol PEN=PE

-

-

Argentina peso (interbank) ARS=RASL

-

-

(Reporting by Sruthi Shankar in Bengaluru; Editing by Sandra Maler)

((sruthi.shankar@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 6749 6328; Reuters Messaging: sruthi.shankar.reuters.com@reuters.net))

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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