Latin American currencies slip as risk-aversion prevails
Latam stocks down 0.9%, FX off 0.7%
Brazil's fiscal package expected to be finalized this week
Matt Gaetz withdraws name for U.S. attorney general post
Updates with mid-session trading
By Shashwat Chauhan and Pranav Kashyap
Nov 21 (Reuters) -Most Latin American currencies slipped on Thursday as investors avoided dipping in to risky assets amid elevated geopolitical tensions between Russia and Ukraine, with Mexico's peso leading losses in the region.
Ukraine said Russia fired what appeared to be an intercontinental ballistic missile at the city of Dnipro, in what would be the first use in war of a weapon designed to deliver long-distance nuclear strikes.
Western officials, who spoke on condition of anonymity, later told Reuters their initial analysis showed it was not an intercontinental ballistic missile, though they left open the possibility that the conclusion could change.
Investors remained on edge, carefully navigating the turbulent waters of the Russia-Ukraine conflict. In this climate of uncertainty, the allure of safe-haven assets like gold XAU= and the U.S. dollar USD= shined.
"Markets are playing it more on the safer side. We're also going in to a period in the next week in which you're getting lower and lower liquidity," said Juan Perez, director of trading at Monex USA.
Mexico's peso MXN= fell nearly 1% to 20.446 per dollar, while Colombia's peso COP= was trading flat at 4,384 in light volumes, likely helped by elevated crude oil prices.
Late on Wednesday, Mexico's lower house of Congress approved a measure to abolish most of the autonomous bodies that regulate some economic sectors and ensure government transparency, a reform that could worsen tensions with the U.S. and hit credit ratings.
The measure is among the constitutional reforms presented in February by former President Andres Manuel Lopez Obrador, and backed by current President Claudia Sheinbaum, aimed at cutting public spending by centralizing the state apparatus.
Mexico's election of judges by popular vote could be pushed back by around three months if the Senate accepts a request by the electoral authority to postpone it, the electoral body's head said.
Brazil's real BRL= dropped 0.78% in catch-up trade after a local holiday on Wednesday, leading losses in the region.
The Brazilian government's chief of staff said that the writing of a highly anticipated fiscal package is expected to be concluded this week, but President Luiz Inacio Lula da Silva has yet to decide the details and the date of an announcement.
Most Latin American currencies have declined lately as the dollar remained resurgent globally on expectations that 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 close trading partners like Mexico.
Republican Matt Gaetz withdrew from consideration as Trump's attorney general, in the face of opposition from the Senate Republicans whose support he would have needed to win the job.
Peru's sol PEN= bucked the trend, ticking 0.2% higher against the dollar.
MSCI's gauge for Latin American currencies .MILA00000CUS slipped 0.74%, while the stocks index .MILA00000PUS fell 0.9%.
Regional heavyweight Brazil's benchmark .BVSP dropped close to 1% after Wednesday's public holiday, while Mexico's bourse .MXX ticked up 0.1% .
Elsewhere in emerging markets, South Africa's central bank opted for another small cut to its main interest rate, bringing the repo rate down to 7.75%, while Turkey's central bank held its policy rate steady at 50%, as widely expected.
Key Latin American stock indexes and currencies:
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1084.84 | -0.82 |
MSCI LatAm .MILA00000PUS | 2060.64 | -0.94 |
Brazil Bovespa .BVSP | 127182.24 | -0.79 |
Mexico IPC .MXX | 50234.44 | 0.13 |
Chile IPSA .SPIPSA | 6593.27 | 0.26 |
Argentina MerVal .MERV | 2133284.01 | -0.59 |
Colombia COLCAP .COLCAP | 1389.75 | 0.25 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.8178 | -0.78 |
Mexico peso MXN= | 20.446 | -0.94 |
Chile peso CLP= | 973.64 | -0.09 |
Colombia peso COP= | 4384 | 0.08 |
Peru sol PEN= | 3.79 | 0.21 |
Argentina peso (interbank) ARS=RASL | 1,003.5 | -0.05 |
Argentina peso (parallel) ARSB= | 1,110.0 | 2.2 |
Reporting by Shashwat Chauhan and Pranav Kashyap in Bengaluru; Editing by Alistair Bell and Matthew Lewis
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