Most Latin American currencies eye monthly declines on geopolitics, Trump jitters
Mexican Senate passes proposal to abolish autonomous bodies
Brazil's real slides to more than six per dollar
Latam FX down 0.6%, stocks slip 1.1%
By Shashwat Chauhan
Nov 29 (Reuters) -Most Latin American currencies were set for monthly losses on Friday, as worries over U.S. President-elect Donald Trump's policies and escalating geopolitical tensions between Russia and Ukraine weighed on investor sentiment.
Brazil's real BRL= traded in uncharted territory, dropping 0.6% to 6.0495 per dollar and on track for a more than 5% monthly drop, while its stock index .BVSP fell 0.4%.
Brazilian assets have been mauled this week after its government proposed late on Wednesday to expand income-tax exemptions for lower-income Brazilians and increase taxes on those who earn more, while outlining plans to trim public spending in coming years.
"The fiscal measures announced have apparently failed to assuage market concerns about the stability of Brazil's fiscal debt trajectory," Dev Ashish, Latin American economist at Societe Generale wrote in a note.
"The announcement was disappointing for several reasons as the proposals come at a time when the economy is overheating due to excessive fiscal support for income and consumption."
Uncertainty over the fiscal measures has been driving volatility in Brazilian markets amid concerns the government has not done enough to meet new budget rules passed last year to rein in the growth of public debt.
Mexico's peso MXN= appreciated 0.3% against a globally weakening dollar, though it was set for its second-straight monthly fall.
The Mexican currency had come under pressure early this week when Trump said he would impose a 25% tariff on imports from Canada and Mexico.
MSCI's index for Latin American currencies .MILA00000CUS dropped 0.6% to its lowest level in more than 18 months, on track to log its second-straight monthly fall.
The stocks index .MILA00000PUS was also set for a monthly loss, trading at its lowest level since July 2022 and down 1.1% on the day.
Latin American assets sold off this month after Trump's election victory this month, while an intensification of the war between Russia and Ukraine compounded losses.
Investors have been weighing Trump's policies on trade, tariffs and immigration, which could ignite a global trade war and increase U.S. inflation.
After a disappointing 2024, Latin American companies are expected to see earnings rebound around 16% next year, JPMorgan JPM.N calculations showed, with almost all countries except Colombia set for double-digit growth.
Elsewhere in emerging markets, Kazakhstan's central bank raised its benchmark interest rate to 15.25% from 14.25% in response to a sharp weakening of the local tenge, which tracks the Russian rouble.
Ghana's central bank kept its main interest rate unchanged at 27.00%.
Trading activity is expected to be light owing to a shortened session in the United States.
HIGHLIGHTS
** Bolsonaro eyes comeback in Brazil with Trump's help, WSJ reports
** Mexican Senate passes proposal to abolish autonomous bodies
** Chile jobless rate hits 8.6% in quarter through October
Key Latin American stock indexes and currencies:
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1077.24 | -0.22 |
MSCI LatAm .MILA00000PUS | 1976.92 | -1.11 |
Brazil Bovespa .BVSP | 124162.95 | -0.36 |
Mexico IPC .MXX | 49683.94 | -0.52 |
Chile IPSA .SPIPSA | 6586.84 | -0.01 |
Argentina Merval .MERV | 2222389.53 | -0.377 |
Colombia COLCAP .COLCAP | 1397.83 | 0.02 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 6.0495 | -0.59 |
Mexico peso MXN= | 20.3457 | 0.32 |
Chile peso CLP= | 978.53 | 0.01 |
Colombia peso COP= | 4412.35 | 0.08 |
Peru sol PEN= | 3.738 | 0.16 |
Argentina peso (interbank) ARS=RASL | 1009 | 0.10 |
Argentina peso (parallel) ARSB= | 1095 | 2.28 |
Reporting by Shashwat Chauhan in Bengaluru; Editing by Rod Nickel
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