Latam FX slips, hurt by firmer dollar and sagging commodity prices
Updated at 10:30 a.m. ET/ 1430 GMT
Lower commodity prices, firmer dollar hurt Latam FX
Mexican peso jumps 1% after sharp losses earlier this week
Latam stocks up 0.1%, FX flat
By Shashwat Chauhan
Aug 28 (Reuters) -Most currencies of resources-rich Latin American countries slipped on Wednesday as the dollar perked up following its recent string of declines, while slipping prices of commodities like crude oil and copper further exacerbated losses.
The dollar index =USD, which measures the greenback against a basket of major global peers, gained 0.4% after hitting its lowest level so far this year last week.
Latin American currencies were boosted last week as the dollar sagged on dovish comments by U.S. Federal Reserve Chair Jerome Powell, with the focus now on the size of an interest rate cut.
"The dollar is in a recovery mode, perhaps as short sellers are liquidating their positions ahead of important releases tomorrow and Friday," said Charalampos Pissouros, senior investment analyst at forex broker XM.
The Fed's preferred inflation measure - the personal consumption expenditures (PCE) index - due Friday, could offer hints on the size of a potential rate cut in September, while weekly jobless claims data is due on Thursday.
Brazil's real BRL= slipped 0.2%, extending losses to a third straight session, also hurt by slipping iron ore prices. IRONORE/
Brazil's central bank chief Roberto Campos Neto said that the country's disinflation process has slowed while inflation expectations have further deviated from the official 3% target recently.
Oil producer Colombia's peso COP= shed 0.6% as crude prices fell around 1%, while top copper producers Chile's peso CLP= and Peru's sol PEN= eased 0.5% and 0.3%, respectively, tracking slipping prices of the red metal. MET/L O/R
The Mexican peso MXN= was an outlier, appreciating 1.5% against the dollar after falling more than 3% in the last two sessions.
Mexico's currency came under pressure this week as lawmakers in the lower of Congress pushed forwarded with a sweeping judicial reform, which has investors on edge.
The proposed reform calls for the popular election of over 7,000 judges and magistrates, including Supreme Court justices. It has caused thousands of judicial workers opposed to the proposal to go on strike while stoking friction with the United States, Mexico's top trade partner.
MSCI's index for Latin American currencies .MILA00000CUS was flat, while a gauge for stocks .MILA00000PUS added 0.1%.
Brazil's Bovespa stock index .BVSP dipped 0.4%, as losses in materials and health care stocks weighed, while the Mexican benchmark .MXX gained 0.8%.
Elsewhere in emerging markets, Israel's shekel ILS= gained 0.6% against the dollar after the Bank of Israel kept interest rates unchanged for the fifth straight meeting.
Pakistan's sovereign dollar bonds gained after Credit ratings agency Moody's upgraded the Asian country's local and foreign currency issuer and senior unsecured debt ratings to 'Caa2' from 'Caa3'.
The 2027 maturity 740840AC7=1M added 0.6 cents to trade at 86.79 cents.
HIGHLIGHTS
** Argentina's government to cut tax on imports to 7.5%
** Venezuela's Machado says peaceful protests, external pressure could still oust Maduro
** IMF approves new credit line for Chile worth $13.8 bln
Key Latin American stock indexes and currencies:
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1097.97 | -0.16 |
MSCI LatAm .MILA00000PUS | 2280.52 | 0.15 |
Brazil Bovespa .BVSP | 136192.69 | -0.43 |
Mexico IPC .MXX | 52882.71 | 0.78 |
Chile IPSA .SPIPSA | 6389.41 | 0.16 |
Argentina Merval .MERV | 1606143.62 | -0.618 |
Colombia COLCAP .COLCAP | 1340.48 | -0.05 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.5184 | -0.19 |
Mexico peso MXN= | 19.4577 | 1.48 |
Chile peso CLP= | 910.8 | -0.49 |
Colombia peso COP= | 4060.85 | -0.6 |
Peru sol PEN= | 3.734 | -0.34 |
Argentina peso (interbank) ARS=RASL | 949 | 0 |
Argentina peso (parallel) ARSB= | 1315 | 1.901140684 |
Reporting by Shashwat Chauhan in Bengaluru
Editing by Nick Zieminski
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