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EMERGING MARKETS-Mexican peso up among muted Latam FX; currencies set for weekly gains

Credit: REUTERS/Jose Luis Gonzalez

The Mexican peso rose after a positive reading on retail sales on Friday as most Latin American currencies traded in tight ranges, although major units in the regions were still set to end the week higher.

By Shreyashi Sanyal

Oct 23 (Reuters) - The Mexican peso rose after a positive reading on retail sales on Friday as most Latin American currencies traded in tight ranges, although major units in the regions were still set to end the week higher.

The peso MXN= rose 0.3% against the dollar after data showed retail sales rose in August by 2.5% from July, the fourth monthly increase in a row, as consumer spending continues to recover from the effects of the coronavirus pandemic.

Mexico's currency has fared somewhat better than its Latin American peers due to the country's close trade ties with the United States, which is now showing signs of a rebound but the peso still remains sensitive to news around the U.S. presidential elections.

The Brazilian real BRBY, BRL= fell after a survey showed consumer confidence fell in October for the first time in six months, suggesting that the economy's recovery may be losing steam. The real is still set for a weekly gain of 0.9%.

Emerging markets FX strategists at Citigroup said October's consumer confidence is still below pre-COVID-19 level and now expect fourth quarter GDP growth to show a significant deceleration following the robust expansion in the third quarter.

Morgan Stanley said on Friday it was time to ramp up exposure to emerging market currencies and hard-currency sovereign debt, with a shift of focus to the vaccine trade in the wake of the U.S. election potentially giving developing assets a boost.

Emerging market stocks saw inflows of $2.7 billion, the largest in six weeks, while emerging market debt saw strong inflows of $2.2 billion, Bank of America said in a note on Friday, citing EPFR data. Investors piled in to EM equities and bonds in the week to Oct. 21.

The International Monetary Fund last week revised up its forecast for the global economy but warned that the outlook was worsening for many emerging markets.

The pesos of Chile CLP= and Colombia COP= outperformed peers for the week, as investors remained hopeful of a recovery in both regions.

Colombia has swapped 2 trillion pesos ($529.5 million) of internal public debt, reducing expiries due in the next two years and avoiding increased indebtedness, the finance ministry said.

Argentina's peso ARS=RASL weakened. Argentine bondholder groups slammed the government on Thursday over economic policies they said were undermining investor confidence in the country, which emerged from a sovereign default in September after a $65 billion restructuring.

Among other emerging markets currencies, Russia rouble RUB= strengthened 0.8% after the country's central bank left interest rates unchanged.

Key Latin American stock indexes and currencies at 1357 GMT:

Stock indexes

Latest

Daily % change

MSCI Emerging Markets .MSCIEF

1134.33

-0.19

MSCI LatAm .MILA00000PUS

1973.42

-0.39

Brazil Bovespa .BVSP

101913.80

Mexico IPC .MXX

38657.88

0.01

Chile IPSA .SPIPSA

3811.05

-0.01

Argentina MerVal .MERV

0.00

Colombia COLCAP .COLCAP

1177.89

Currencies

Latest

Daily % change

Brazil real BRBY

5.6148

-0.40

Mexico peso MXN=D2

20.8969

0.24

Chile peso CLP=CL

776.7

0.28

Colombia peso COP=

3775

0.19

Peru sol PEN=PE

3.6007

0.03

Argentina peso (interbank) ARS=RASL

78.0300

0.05

Argentina peso (parallel) ARSB=

186

-1.61

(Reporting by Shreyashi Sanyal in Bengaluru Editing by Chizu Nomiyama)

((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.

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