Emerging Markets: Mexico's peso hits one-month low, leads declines among Latam FX

America Movil SAB de CV

16/10/2024 21:39

* 
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quarter
    

        * 
      Brazil to extend fiscal rules' lifespan, says Haddad
    

        * 
      Argentina's trade surplus nears $16 billion under Milei
    

        * 
      Chile rate decision on Thursday
    

        * 
      Latam stocks down 0.2%, FX off 0.6%
    

  
 (Updated at 2028 GMT)
    By Shashwat Chauhan and Johann M  Cherian
       Oct 16 (Reuters) - Mexico's peso hit a one-month low on
Wednesday and led declines among currencies in Latin America,
while a rebound in copper prices helped gains in top exporter
Chile's peso.
    Mexico's peso  MXN=  depreciated 1.2%, having fallen more
than 3% this week against a stronger dollar, as investors priced
in a likelihood of Republican candidate Donald Trump in the
White House, just weeks away from pivotal U.S. Presidential
elections.
    The former president has proposed to impose tariffs of more
than 200% on vehicles imported from the region's second-largest
economy, one of the engines of Mexican economic activity.
        Further, Trump's policies to cut taxes and ease
financial regulations could stoke inflation pressures and rattle
the U.S Federal Reserve's monetary easing cycle, thereby
increasing appetite for the greenback.
   However, Paul Donovan, Chief Economist at UBS Global Wealth
Management said, "U.S. and European investors have viewed
proposed tariffs as a bargaining device, not to be taken
seriously. However, the repeated theme of trade taxes implies
the policy is important."
    Iron ore exporter Brazil's real  BRL=  slipped 0.2% after
falling 1% in the last session, as prices of the base metal fell
on the prospect of weakening global demand.  IRONORE/ . 
    With the country's high level of spending under scrutiny,
Finance Minister Fernando Haddad said the region's biggest
economy aims to ensure the longevity of its fiscal rules with a
set of spending control measures to be announced this year.
    However, yield on sovereign bonds  BR2YT=RR   BR5YT=RR 
 BR10YT=RR  rose over 20 basis points each.
    Bucking the trend, the world's biggest copper producer
Chile's peso  CLP=  appreciated 1%, as prices of the red metal
rebounded after the market stabilized at a technical support
level.  MET/L 
        Later in the week, Chile's central bank is expected to
lower its benchmark interest rate by 25 basis points to 5.25%.
    Fellow copper producer Peru's sol  PEN=  was flat, while
Colombia's peso  COP=  dipped 0.2%, to touch a one-month low.
    Uncertainty over the magnitude of stimulus from leading
commodities consumer China has added to expectations of reduced
demand, pressuring currencies in the region. An index tracking
Latin American currencies  .MILA00000CUS  fell 0.6%.
        Traders are pricing the Federal Reserve to cut rates in
November by a smaller 25 basis points, further aiding the
dollar's gains. On Thursday, U.S. retail sales reading and
jobless claims data could set the tone for market expectations
around the Fed's rate path.
    A gauge for local stock indexes  .MILA00000PUS  was down
0.2%, although Brazil's Bovespa  .BVSP  added 0.5% helped by 
communication services stocks.
    Mexico's main index  .MXX  added 0.2% with America Movil
 AMXB.MX  jumping 3.2% after it more than tripled its net profit
in the third quarter from a year ago. The telecommunications
giant is also exploring an agreement with Elon Musk's SpaceX. 
    Argentina's MerVal index  .MERV  slid 2%. The country likely
had a trade surplus for the tenth straight month in September
under libertarian President Javier Milei.
                 
    Key Latin American stock indexes and currencies:
    
 Latin American market                          
 prices from Reuters                   
                                       
                                       
                                       
                                       
                                       
                                       
                                       
 MSCI Emerging Markets        1143.72      -0.52
  .MSCIEF                              
 MSCI LatAm                   2185.58      -0.17
  .MILA00000PUS                        
 Brazil Bovespa  .BVSP      131668.32       0.48
 Mexico IPC  .MXX            52503.03       0.24
 Chile IPSA  .SPIPSA          6542.64      -0.25
 Argentina Merval  .MERV    1776060.5     -2.213
                                    1  
 Colombia COLCAP  .COLCAP     1337.26       0.63
                                                
                                       
                                       
                                       
                                       
                                       
                                       
                                       
 Brazil real  BRL=             5.6606      -0.18
 Mexico peso  MXN=            19.9179      -1.19
 Chile peso  CLP=                 933          1
 Colombia peso  COP=          4256.66      -0.25
 Peru sol  PEN=                3.7622       0.05
 Argentina peso                   980       0.00
 (interbank)  ARS=RASL                 
 Argentina peso (parallel)       1200       2.92
  ARSB=                                
 


 (Reporting by Shashwat Chauhan and Johann M Cherian in
Bengaluru; editing by Barbara Lewis and Alistair Bell)
 ((Shashwat.Chauhan@thomsonreuters.com;))