Most Latam FX on track for weekly declines amid global risk-off wave
Global tech outage hits Azul, Bradesco, LATAM Airlines
Embraer climbs as deliveries rise 88% in second quarter
Mexican economy up 0.9% y/y in June, preliminary estimate shows
Updated at 3:31 p.m. ET/1931 GMT
By Johann M Cherian and Shashwat Chauhan
July 19 (Reuters) -Most currencies in Latin America were headed for weekly declines on Friday, as a global tech outage, lower commodity prices and jitters about the upcoming U.S. elections curbed risk taking and investors assessed Brazil's decision to freeze some spending.
MSCI's index tracking Latam currencies .MILA00000CUS was down 1%, set to end the week lower by over 2%, its biggest weekly drop in over a month.
Copper producer Chile's peso CLP= dipped 0.5%, and was on track for its biggest weekly drop in four months of over 4%.
Much of the losses were driven by copper prices that fell to a three-month low on disquiet about a weak Chinese economy and the lack of stimulus announcements. MET/L
Mexico's peso MXN= extended losses to a fourth straight session and was last down 0.8%. Aninitial estimate showed the region's second-largest economy likely grew by 0.9% in June compared with the same month a year earlier.
In Brazil, thereal BRL= shed 1%, while the yield on sovereign bonds BR2YT=RR, BR5YT=RR, BR10YT=RR rose between 15 and 24 basis points (bps).
On Thursday, Finance Minister Fernando Haddad announced plans to freeze 15 billion reais ($2.70 billion) from the 2024 budget as the government struggles to meet this year's fiscal target.
"All things considered, we note that, even though this is a positive first freeze made by the administration, it still is insufficient to deliver the yearend primary fiscal result within the target," strategists at Citi wrote in a morning note.
The currency is among the biggest losers in the region, down nearly over 15% year-to-date, as traders feared excessive government spending in the region's largest economy.
Bucking the trend, Colombia's peso COP= appreciated 0.3% against the dollar after falling for the last four sessions.
An index tracking regional equity indexes .MILA00000PUS was on track for a weekly loss of around 3%.
Brazilian carrier Azul AZUL4.SA, lender Bradesco BBDC4.SA and Chile's LATAM Airlines LTM.SN were among the businesses affected by a global tech outage.
Azul added over 2%, while Bradesco was flat and LATAM lost 0.5%.
Brazil's Bovespa .BVSP was last down about 0.1%. Embraer EMBR3.SA jumped 2.1% after the planemaker said its second quarter deliveries surged 88% from a year ago.
Argentina's MerVal index .MERV rose 2.4%, while Mexico's benchmark .MXX last up 0.9%.
BCRA central bank said it had agreed with lenders to terminate liquidity options contracts worth approximately 13.17 trillion pesos ($14.2 billion), saying this would help to reduce uncertainty concerning monetary policy.
Key Latin American stock indexes and currencies:
Latest | Daily % change | |
MSCI Emerging Markets .MSCIEF | 1087.76 | -1.64 |
MSCI LatAm .MILA00000PUS | 2236.50 | -0.71 |
Brazil Bovespa .BVSP | 127565.70 | -0.07 |
Mexico IPC .MXX | 53508.39 | 0.88 |
Chile IPSA .SPIPSA | 6556.08 | -0.31 |
Argentina MerVal .MERV | 1565592.86 | 2.407 |
Colombia COLCAP .COLCAP | 1366.02 | 0.11 |
Currencies | Latest | Daily % change |
Brazil real BRBY | 5.6010 | -0.25 |
Mexico peso MXN=D2 | 18.0828 | -0.75 |
Chile peso CLP=CL | 946.9 | -0.42 |
Colombia peso COP= | 4037.5 | 0.31 |
Peru sol PEN=PE | 3.7367 | -0.18 |
Argentina peso (interbank) ARS=RASL | 924.0000 | 0.11 |
Argentina peso (parallel) ARSB= | 1425 | 2.11 |
Reporting by Johann M Cherian and Shashwat Chauhan in Bengaluru; Editing by Barbara Lewis and Daniel Wallis
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