Mexican Peso leads gains amongst Latam FX; Banxico cuts interest rates
Brazil's economic activity beats expectations in September
Argentina's risk index falls to lowest level since July 2019
Colombia's Ecopetrol third-quarter profit slides 28%
Banxico cuts rates by 25 bps
MSCI Latam stocks index flat, FX up 0.4%
Updated at 1450 ET
By Johann M Cherian and Pranav Kashyap
Nov 14 (Reuters) -Most Latin American currencies ticked up against the dollar on Thursday, with the Mexican peso leading the charge as its central bank cut interest rates by 25 basis points.
Mexico's peso MXN= inched up 0.41% in a volatile session against the dollar. Banxico lowered borrowing costs by 25 basis points to 10.25%.
Uncertainty over President-elect Donald Trump's policies on trade, immigration and security following his Nov. 5 election victory also prevailed, with the peso experiencing the steepest declines among peers so far this year.
Separately, Mexican President Claudia Sheinbaum said her government would in the coming days present a plan to protect the country's non-genetically modified white corn under the constitution.
"Markets have priced in too much weakness on the peso and there could be a correction, but it doesn't change the outlook. The fiscal outlook for Mexico is very challenging," said Wilson Ferrarezi, an economist at TS Lombard.
Brazil's real BRL= edged up 0.3% against the dollar after the latest data pointed to robust economic activity in the region's largest economy, underscoring expectations for coming rate hikes by the central bank.
Brazil has been affected to a lesser extent by the appreciation of the U.S. dollar following Trump's election victory, Brazil's central bank chief Roberto Campos Neto said.
Markets awaited any measures to stabilize public finances, with Brazil's central bank chief saying the government must cut spending to the bone, as per a report.
The real has weakened amid government hesitation to announce a fiscal package to stem a rapid rise in mandatory spending.
"If they announce something that is seen as inadequate, then markets will sell off. They need to get this right," said Jon Harrison, managing director for EM macro strategy at TS Lombard.
Currencies of copper producers Chile CLP= and Peru PEN= edged up 0.36% and 0.3% respectively, while Colombia's peso COP= was trading flat.
Traders also monitored an Asia Pacific Economic Cooperation summit in Peru alongside a Group of 20 leading economies forum in Brazil against the backdrop of Trump's recent win.
An index tracking top currencies in the region .MILA00000CUS edged 0.4% higher. Ratings agency S&P Global said it expects any delay in Fed rate cuts to also slow the pace of monetary easing across the region.
Further, private fixed investment in Mexico could soften until there is more clarity on trade policies from the incoming U.S. administration, it said. Mexico had benefited from U.S. companies shifting some operations closer to home over the past two years.
On the equities front, MSCI's equity index tracking regional stocks .MILA00000PUS was trading flat, while Brazil's Bovespa index .BVSP was up 0.17%.
Mexico's benchmark stocks index .MXX was down 0.4.
Colombia's Colcap index .COLCAP rose 1.1%, with state-owned oil producer Ecopetrol ECO.CN rising 5.4% after reporting third-quarter results.
Argentina's Merval index .MERV added 2.4%.
The JPMorgan risk benchmark, which shows the yield spread on bonds versus comparable U.S. debt, reached its lowest level since July 2019. Markets were optimistic about the policies of Argentina President Javier Milei, who is also seen as a political ally of Trump.
Key Latin American stock indexes and currencies:
Latin American market prices from Reuters | ||
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1084.69 | -0.82 |
MSCI LatAm .MILA00000PUS | 2090.88 | flat |
Brazil Bovespa .BVSP | 127955.68 | 0.17 |
Mexico IPC .MXX | 50543.82 | -0.40 |
Chile IPSA .SPIPSA | 6478.97 | -1.21 |
Argentina Merval .MERV | 2092313.58 | 2.44 |
Colombia COLCAP .COLCAP | 1352.76 | 1.12 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.78 | 0.30 |
Mexico peso MXN= | 20.40 | 0.41 |
Chile peso CLP= | 975.21 | 0.36 |
Colombia peso COP= | 4478.50 | flat |
Peru sol PEN= | 3.80 | 0.30 |
Argentina peso (interbank) ARS=RASL | 998 | flat |
Argentina peso (parallel) ARSB= | 1120 | flat |
Reporting by Johann M Cherian in Bengaluru; editing by Jonathan Oatis
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