US Markets

EMERGING MARKETS-Latam FX gains as dollar crumbles, Mexican peso at 6-week high

Credit: REUTERS/LUISA GONZALEZ

Mexico's peso rose to a near six-week peak on Monday, with most other Latin American currencies gaining on the back of a weakening dollar as concerns rose about the U.S. economy.

By Shreyashi Sanyal

July 27 (Reuters) - Mexico's peso rose to a near six-week peak on Monday, with most other Latin American currencies gaining on the back of a weakening dollar as concerns rose about the U.S. economy.

The peso MXN= firmed more than 1% against the dollar, while the Brazilian real BRBY rose 0.3%.

Expectations of a more accommodative policy stance from the Federal Reserve and deteriorating U.S.-China relations also played into the dollar's =USD weakness. FRX/

Analysts, noted, however that the mood was still not entirely "risk-on," as coronavirus cases spiked in most regions of Latin America.

For the first time, cases in Latin America surpassed the combined infections in the United States and Canada, a Reuters tally showed on Sunday, amid a surge of infections in Brazil, Mexico, Peru, Colombia and Argentina.

"Today, risk markets haven't bounced back to form as the absolute sum of total global case counts is proving to be a hard pill for investors to swallow to start the week," said Stephen Innes, chief global market strategist at AxiCorp.

A central bank survey showed the outlook for Brazil's economy improved for the fourth week in a row, with economists expecting Latin America's largest economy to shrink by 5.8% this year, compared with a 5.95% fall in GDP forecast last week and 6.5% a month ago.

Chile's peso CLP= strengthened by 0.7% on higher prices of its main export, copper, as expectations for a recovery in global demand for the red metal were at play. MET/L

The Colombian peso COP= also edged higher, with local investors eyeing a decision on interest rates by the country's central bank. Analysts expect a cut of 25 basis points at the end of the policy meeting on Friday.

"While the monetary policy committee is likely to maintain its data-dependent, gradualist tilt in its statement on Friday... our forecasts anticipate another 25 bps cut at a subsequent meeting to keep taking the policy rate through record lows to a terminal rate of 2.00% for this easing cycle," analysts at Scotiabank Economics said in a client note.

The Argentine peso ARS= retreated after the government reaffirmed on Saturday that it would not budge from its latest proposal to restructure $65 billion in debt, but signaled it would be willing to negotiate on the fine print around the deal.

Most stock indexes in the region opened higher, tracking gains on Wall Street. .N

Key Latin American stock indexes and currencies;

Stock indexes

Latest

Daily % change

MSCI Emerging Markets .MSCIEF

1072.29

1.11

MSCI LatAm .MILA00000PUS

2106.56

2.26

Brazil Bovespa .BVSP

103723.53

1.31

Mexico IPC .MXX

37382.54

0.07

Chile IPSA .SPIPSA

4051.30

0.91

Argentina MerVal .MERV

49630.70

2.11

Colombia COLCAP .COLCAP

1180.21

0.53

Currencies

Latest

Daily % change

Brazil real BRBY

5.1637

0.82

Mexico peso MXN=D2

21.9900

1.22

Chile peso CLP=CL

765.7

1.01

Colombia peso COP=

3669.68

0.61

Peru sol PEN=PE

3.5258

0.23

Argentina peso (interbank) ARS=RASL

72.0700

-0.24

Argentina peso (parallel) ARSB=

134

3.73

(Reporting by Shreyashi Sanyal in Bengaluru)

((Shreyashi.Sanyal@thomsonreuters.com; +1 646 223 8780; +91 961 144 3740; Twitter: https://twitter.com/s_shreyashi;))

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

Other Topics

World Markets

Latest Markets Videos

Reuters

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

Learn More