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EMERGING MARKETS-Latam FX subdued as trade uncertainty persists; stocks gain

Credit: REUTERS/MARCOS BRINDICCI

Most Latin American currencies moved little against the dollar on Tuesday as investors remained on edge after a recent escalation in the U.S.-China trade dispute, although an index of the region's stocks snapped a three-day run of losses.

By Sruthi Shankar

Aug 27 (Reuters) - Most Latin American currencies moved little against the dollar on Tuesday as investors remained on edge after a recent escalation in the U.S.-China trade dispute, although an index of the region's stocks snapped a three-day run of losses.

Brazil's real currency BRL= - which, bar Argentina's peso ARS=, has lagged its Latin American peers with a near 8% loss this month - steadied at 4.15 per dollar.

Brazil's central bank president, Roberto Campos Neto, said the economy was stable or expanded slightly in the second quarter, but said the pace of growth should pick up, albeit gradually.

The country is also facing pressure from world leaders because of an environmental crisis due to a record number of fires in the Amazon rainforest. After European leaders threatened to tear up a trade deal with South America last week, Brazil's Foreign Trade Secretary Marcos Troyjo said the EU-Mercosur trade pact was still under review.

Other currencies in the region were more subdued, with the Mexican peso MXN=, the Colombian peso COP= and the Chilean peso CLP= falling between 0.16% and 0.6% as investors assessed conflicting comments from U.S. and Chinese officials over the drawn-out trade dispute.

"Should our view of further escalation and slower global growth play out, there would be more pain in the risk market. In EMFX, we remain defensive," Morgan Stanley analysts wrote in a note.

U.S. President Donald Trump sought to ease tensions by predicting another round of talks with Beijing on Monday, although China's foreign ministry said it had not received any recent phone call from the United States on trade.

Stock markets were a bright spot, with the MSCI's index of Latin American equities .MILA00000PUS gaining about 1% as Sao Paulo-listed shares .BVSP tacked on 1.4%.

Mexico's main stock index .MXX also jumped more than 1% after the government said it would save $4.5 billion from a deal struck with a group of companies over a dispute surrounding contracts for gas pipelines issued under the previous administration.

Argentina's peso ARS= dropped 0.5% to trade at 55.58 per dollar. Traders said the central bank sold two rounds of $50 million from its own reserves at a rate of 55.44 pesos per dollar and 55.4729 pesos per dollar, respectively.

The central bank is selling reserves to intervene in the foreign exchange market and defend the beleaguered peso after opposition candidate Alberto Fernandez netted a significant lead over incumbent Mauricio Macri in the Aug. 11 primary vote.

Latin American stock indexes and currencies at 2010 GMT:

Stock indexes

Latest

Daily % change

MSCI Emerging Markets .MSCIEF

965.87

0.53

MSCI LatAm .MILA00000PUS

2499.25

0.94

Brazil Bovespa .BVSP

97758.27

1.38

Mexico IPC .MXX

40444.79

0.91

Chile IPSA .SPIPSA

4647.43

0.67

Argentina MerVal .MERV

25545.94

-1.1

Colombia IGBC .IGBC

12397.48

0.6

Currencies

Latest

Daily % change

Brazil real BRL=

4.1582

-0.05

Mexico peso MXN=

19.9739

-0.27

Chile peso CLP=CL

720.45

-0.16

Colombia peso COP=

3451.35

-0.59

Peru sol PEN=PE

3.3828

-0.02

Argentina peso (interbank) ARS=RASL

55.5800

-0.49

(Reporting by Sruthi Shankar in Bengaluru; editing by Jonathan Oatis)

((sruthi.shankar@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 6749 6328.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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