Mexican peso leads Latam FX lower; Brazil in focus
Updated at 1516 GMT
Brazil's Lula urges Congress to cut spending
APEC summit to be hosted by Chile this week
MSCI Latam stocks index down 0.6%, FX off 0.6%
By Pranav Kashyap and Johann M Cherian
Nov 11 (Reuters) -Most currencies in resources-rich Latin America started the week on a dour note, led by Mexico's peso as investors evaluated developments in China and speculated on how U.S. President-elect Donald Trump would shape his new administration.
The Mexican peso MXN= fell by 1.7% against the U.S. dollar on Monday, as investors awaited Banxico's interest rate decision and the government's budget proposal for the next year, both expected later in the week.
Mexico's fiscal deficit is projected to reach approximately 5.9% this year, marking its highest level in several decades. President Claudia Sheinbaum reaffirmed the commitment to reducing the deficit to about 3.5% by 2025
A broader index tracking Latam stocks .MILA00000PUS lost 0.6%, while a currencies index .MILA00000CUS dropped 0.6% against a stronger dollar.
Assets in the region, particularly in Mexico and Argentina, have suffered significant volatility in the aftermath of Trump's win in the U.S. presidential election last week.
However, the indexes finished the week higher with analysts pointing to much of the election outcome priced in.
All eyes will be on potential candidates for Trump's cabinet, which could influence the speed and extent of his proposed policies on trade, immigration, and security once he assumes office in January.
Tom Homan, former acting director of Immigration and Customs Enforcement (ICE), will oversee the country's borders in the new administration.
"Investors this time need to be a little more worried as Donald Trump only has four years to implement his measures, so he will try to do as much as he can in order to leave some sort of a legacy," said Andres Abadia, Pantheon Macroeconomics' chief Latin America economist.
Meanwhile, Brazil's real BRL= dropped 1%, as prices of iron ore, a top export item, slid to their lowest in over two weeks as investors were disappointed by China's economic stimulus. IRN/
Traders were focused on any new announcements on fiscal austerity as they assessed an interview with President Luiz Inacio Lula da Silva, in which he called on Brazil's Congress to reduce spending.
The real has encountered considerable pressure due to concerns about the sustainability of the nation's public finances.
"The government's trying hard to get this deal approved by Congress, however some investors are still concerned about what the government, in reality, can do," said Abadia.
Currencies of copper producers Chile CLP= and Peru PEN= weakened 0.9% and 0.2% respectively as prices of the red metal softened. MET/L
Chile is preparing to host Asia-Pacific Economic Cooperation (APEC) leaders this week, with China's President Xi Jinping slated to attend.
Among top bourses in the region, the Bovespa .BVSP dipped 0.3%, bogged down by a 2.2% drop in Vale SA VALE3.SA after brokerage UBS downgraded the miner to "neutral" from "buy".
Mexican stocks .MXX slipped 0.4%, while Colombia's Colcap .COLCAP and Argentina's Merval index .MERV lost 1.74% and 1.6%, respectively.
Key Latin American stock indexes and currencies:
Latin American market prices from Reuters | ||
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1124.52 | -0.98 |
MSCI LatAm .MILA00000PUS | 2102.05 | -0.63 |
Brazil Bovespa .BVSP | 127382.83 | -0.35 |
Mexico IPC .MXX | 51621.63 | -0.43 |
Chile IPSA .SPIPSA | 6559.1 | 0.6 |
Argentina Merval .MERV | 1933353.3 | -1.585 |
Colombia COLCAP .COLCAP | 1335.33 | -1.74 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.7935 | -0.97 |
Mexico peso MXN= | 20.506 | -1.66 |
Chile peso CLP= | 979.4 | -0.95 |
Colombia peso COP= | 4358.49 | -0.04 |
Peru sol PEN= | 3.772 | -0.21 |
Argentina peso (interbank) ARS=RASL | 997.5 | -0.35 |
Argentina peso (parallel) ARSB= | 1120 | 1.32 |
Reporting by Pranav Kashyap and Johann M Cherian in Bengaluru
Editing by Gareth Jones
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