Brazilian real leads Latin American currencies higher; dollar stalls
Updated at 14:30 EST
Brazil's government sees inflation within target band
Chile's GDP up 0.7% in Q3 from previous quarter
Latin American stocks up 0.75%, currencies up 0.93%
By Shashwat Chauhan, Pranav Kashyap
Nov 18 (Reuters) -Most Latin American currencies advanced on Monday, as the dollar's resurgence appeared to ease globally, while elevated prices of commodities such as iron ore and crude oil also helped gains in the region.
Brazil's real BRL= led the rises, up nearly 1% against the dollar following a local holiday on Friday, while Colombia's peso COP= appreciated 0.57%, aided by elevated crude oil prices. [O/R]
"There's potentially a bit of profit-taking going with the dollar today," said Fiona Cincotta, senior market analyst at City Index.
Over the weekend, Brazil's FinanceMinister Fernando Haddad said in an interview with Times Brasil/CNBC that the Brazilian government's package of spending cuts is practically done and will be released soon, pending only a response from the defense ministry.
"The news about the fiscal package is supporting the real and is giving some investors confidence that the government will try and bring in some sort of fiscal consolidation that will help the currency in the medium-term," said Andres Abadia, Pantheon Macroeconomics' chief Latin America economist.
Brazil's finance ministry raised its inflation forecasts for this year but expects inflation to remain within the official target band, in contrast to a more negative view held by the markets.
Meanwhile, Brazilian development bank BNDES, on the sidelines of the G20 summit in Rio de Janeiro, signed a deal with the Asian Infrastructure Investment Bank for the investment of 16.7 billion reais ($2.89 billion) in the country.
Chile's peso CLP= gained 0.69% after data showed the Andean nation's gross domestic product grew 0.7% in the third quarter of 2024 from the previous three-month period, slightly surpassing market expectations of a 0.6% increase.
Colombia's economy grewslower than expected in the third quarter, data showed. It grew 2% compared to expectations of a 2.3% increase.
Most Latin American currencies had clocked weekly losses on Friday as the dollar remained resurgent globally on expectations the Federal Reserve would slow its pace of monetary easing.
Uncertainty over the impact of U.S. President-elect Donald Trump's policies on immigration, trade and tariffs has pressured Latin American assets, particularly the Mexican peso MXN=, which currently sits near its lowest level in more than a year against the dollar. It ticked up 0.4%.
Trump's plans for lower taxes and higher tariffs are expected to spur inflation and reduce the Fed's scope to further easeinterest rates.
MSCI's index for Latin American currencies .MILA00000CUS was up 0.93% after posting losses last week, while a gauge for stocks .MILA00000PUS added 0.75%.
Stock exchanges in Colombia .COLCAP andChile .SPIPSA rose, while the main index in regionalheavyweight Brazil .BVSP was trading flat.
Equity markets in Mexico and Argentina were closed for a public holiday.
HIGHLIGHTS
** Argentina investors bet on Milei's popularity a year after his election
** Brazil's Lula opens G20 summit with call for action on poverty, climate
** Venezuela depreciation risks reversing years of inflation gains
Key Latin American stock indexes and currencies:
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1090.71 | 0.53 |
MSCI LatAm .MILA00000PUS | 2091.82 | 0.75 |
Brazil Bovespa .BVSP | 127741.55 | flat |
Mexico IPC .MXX | - | - |
Chile IPSA .SPIPSA | 6542.59 | 0.24 |
Argentina Merval .MERV | - | - |
Colombia COLCAP .COLCAP | 1356.80 | 0.80 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.74 | 0.9 |
Mexico peso MXN= | 20.22 | 0.40 |
Chile peso CLP= | 972.66 | 0.69 |
Colombia peso COP= | 4405.96 | 0.35 |
Peru sol PEN= | 3.79 | 0.16 |
Argentina peso (interbank) ARS=RASL | 998 | flat |
Argentina peso (parallel) ARSB= | 1120 | flat |
Reporting by Shashwat Chauhan and Pranav Kashyap in Bengaluru; Editing by Alistair Bell and Paul Simao
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