Latam FX down as geopolitical worries trigger risk-off trading
Suriname signs debt rescheduling with China
Mexican peso set to snap four-day win streak
Argentina's stock benchmark at record highs
Latam stocks down 0.2%, FX off 0.3%
By Shashwat Chauhan
Nov 19 (Reuters) -Most Latin American currencies slipped on Tuesday as global sentiment turned risk-off amid escalating geopolitical tensions between Russia and Ukraine, with traditional safe havens outperforming emerging market peers.
Russian President Vladimir Putin lowered the threshold for a nuclear strike in response to a broader range of conventional attacks, and Moscow said Ukraine had struck deep inside Russia with U.S.-made ATACMS missiles.
"Headlines around Russia-Ukraine escalation have led to a risk-off repricing across markets, with safe-havens currencies outperforming," economists at Goldman Sachs wrote in a morning note.
Investors fled to safe-haven currencies such as the U.S. dollar =USD, Japanese yen JPY=EBS and the Swiss Franc CHD=D3, while gold XAU= was also on the rise.
It followed reports this week that U.S. President Joe Biden would allow Ukraine to fire American long-range missiles deep into Russia.
Brazil's real BRL= was the helm of losses early on, down 0.4%, while Chile's peso CLP= shed 0.2%.
Brazil's central bank chief Roberto Campos Neto said the country faces a clear inflation challenge, pointing to concerns about service inflation and inflation expectations unanchored from the official target.
Also on the radar this week will be the release of the Brazilian government's package of spending cuts, which Finance Minister Fernando Haddad said in an interview over the weekend could be released soon.
The Mexican peso MXN= lost 0.2%, on track to snap a four-day winning streak, while Colombia's peso COP= held firm at 4392 per dollar in light trading.
Colombia needs to cut budget spending by 56 trillion pesos ($12.7 billion) to comply with its fiscal rule this year, an independent committee of experts said, a much higher figure than is being discussed publicly by officials.
The Bank of Mexico will likely be able to continue cutting its benchmark interest rate due to the progress made on bringing inflation down, bank governor Victoria Rodriguez told Reuters in an interview.
MSCI's index for Latin American currencies .MILA00000CUS dipped 0.3%, while a gauge for stocks .MILA00000PUS was down 0.2%.
Local bourses were mixed, though Argentina's benchmark .MERV jumped more than 4% to a record high, as traders returned after a local market holiday on Monday.
Latin American assets have struggled recently as markets mulled U.S. President-elect Donald Trump's fiscal, trade and immigration policies, which could be a drag on most developing economies.
All eyes are on Trump's cabinet selection, with the search for a Treasury secretary widening after last week's picks for health and defense roles.
Also exerting pressure, the dollar has stayed resilient on expectations the Federal Reserve would slow its pace of easing.
Elsewhere in emerging markets, Hungary's central bank left its base rate steady at the European Union's joint highest level of 6.5%, as expected.
Late on Monday, Suriname's Finance Minister Stanley Raghoebarsing told the National Assembly that the country has signed a debt rescheduling with China, with the head of the South American country's debt management office saying first repayments to creditors will come this year.
Key Latin American stock indexes and currencies:
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1094.28 | 0.42 |
MSCI LatAm .MILA00000PUS | 2085.52 | -0.22 |
Brazil Bovespa .BVSP | 128262.72 | 0.39 |
Mexico IPC .MXX | 50465.43 | -0.01 |
Chile IPSA .SPIPSA | 6583.54 | 0.63 |
Argentina Merval .MERV | 2156335.31 | 4.326 |
Colombia COLCAP .COLCAP | 1359.59 | -0.2 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.7727 | -0.44 |
Mexico peso MXN= | 20.2459 | -0.22 |
Chile peso CLP= | 974.54 | -0.21 |
Colombia peso COP= | 4392 | 0.03 |
Peru sol PEN= | 3.795 | -0.03 |
Argentina peso (interbank) ARS=RASL | 1002 | -0.30 |
Argentina peso (parallel) ARSB= | 1115 | 2.24 |
Reporting by Shashwat Chauhan in Bengaluru, editing by Ed Osmond
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