Latam currencies on track for monthly declines over Trump policy fears, global tensions
Mexican Senate passes proposal to abolish autonomous bodies
Brazil's real stabilizes after two straight declines
Latam FX flat, stocks slip 0.75%
Updates to mid-session trading
By Shashwat Chauhan and Pranav Kashyap
Nov 29 (Reuters) -Most Latin American currencies were poised for monthly losses on Friday, as worries over U.S. President-elect Donald Trump's policies and escalating tensions between Russia and Ukraine weighed on investor sentiment.
Brazil's real BRL= stabilized, rising 0.2% to 6.0038 per dollar, following a decline of over 3% in the previous two sessions. The rebound came as congressional leaders said they would put the brakes on government income-tax reform, and the finance minister stressed that fiscal commitment goes beyond a new spending cuts package.
"Sentiment could improve if the Congress votes on the spending-cut package before the year-end recess," said TS Lombard analysts.
The real was on track for a nearly 4% monthly drop.
Brazil's stock index .BVSP also regained some ground, up about 0.2%.
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.
Uncertainty over the fiscal measures has been driving volatility in Brazilian markets amid concerns the government has not done enough to meet budget rules passed last year to rein in the growth of public debt.
Separately, Brazil's incoming central bank governor Gabriel Galipolo said the monetary authority does not aim to target or defend any specific exchange-rate level, intervening only in cases of "market dysfunction".
Meanwhile, Mexico's peso MXN= appreciated 0.3% against a globally weakening dollar, though it was set for its second-straight monthly fall.
Mexican President Claudia Sheinbaum said the country has a plan if the United States imposes tariffs on crude oil exported from the Latin American nation, giving some relief to the peso.
The Mexican currency had come under pressure this week when Trump said he would impose a 25% tariff on imports from Mexico and Canada.
Chile's peso led gains among Latin American currencies, rising 0.6%, bolstered by a reported 6.7% increase in copper production from the world's largest producer of the red metal.
MSCI's index for Latin American currencies .MILA00000CUS was flat and at 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 0.75% 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.
Trading activity was 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
Key Latin American stock indexes and currencies:
Stock indexes | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1078.01 | -0.15 |
MSCI LatAm .MILA00000PUS | 1984.27 | -0.75 |
Brazil Bovespa .BVSP | 124823.46 | 0.17 |
Mexico IPC .MXX | 49935.78 | -0.01 |
Chile IPSA .SPIPSA | 6576.78 | -0.16 |
Argentina MerVal .MERV | 2253352.13 | 1.01 |
Colombia COLCAP .COLCAP | 1391.06 | -0.47 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 6.0038 | 0.17 |
Mexico peso MXN= | 20.3457 | 0.32 |
Chile peso CLP= | 972.5 | 0.62 |
Colombia peso COP= | 4438.5 | -0.51 |
Peru sol PEN= | 3.738 | 0.16 |
Argentina peso (interbank) ARS=RASL | 1,010.0 | 0.00 |
Argentina peso (parallel) ARSB= | 1,100.0 | 1.79 |
Reporting by Shashwat Chauhan and Pranav Kashyap in Bengaluru; Editing by Rod Nickel
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