Latam FX, stocks touch multi-week lows as dollar pops
Brazil's central government deficit down in August
Ghana says bondholders have signed off on $13 bln debt overhaul
Latam FX down 1%, stocks down 1.9%
By Ankika Biswas
Oct 3 (Reuters) -Currencies of major Latin American nations weakened against a stronger dollar on Thursday, with Brazil's real leading the way as investors pondered the trajectory of U.S. interest-rate cuts and the ongoing Middle East conflict.
The MSCI index for Latam currencies .MILA00000CUS dropped almost 1%, hitting a more than one-week low, on track for its steepest one-day fall since late August.
On top of safe-haven demand, the dollar =USD also strengthened on expectations that the U.S. Federal Reserve will not rush to cut interest rates, further steering investors away from riskier assets.
The ongoing geopolitical tensions soured investors' sentiment at a time when emerging markets were riding high on a series of Chinese stimulus measures and the Fed's recent 50-basis-point rate cut, prompting a steady ascent in their stocks and currencies.
"While China is trying to reshuffle market expectations, data is likely to get worse before it gets better. Stimulus is a second order effect but should favor CLP (Colombia) and BRL (Brazil) over MXN (Mexico) in LatAm in the months ahead," strategists at TD Securities noted.
Brazil's real BRL= weakened 1% against the dollar to a more than one-week low.
Data showed Brazil's central government deficit in August was in line with expectations, marking a nearly 20% drop from the shortfall seen a year earlier amid rising revenue.
A more than 1% fall in copper prices weighed on top producers Chile's peso CLP= and Peru's sol PEN=, down 0.9% and 0.2% respectively to around one-week lows.
Mexico's peso MXN= and Colombia's peso COP= also weakened around 0.5% each against the greenback.
Analysts were waiting for minutes from Colombia's September policy meeting, where the interest rate was cut by 50 basis points.
The MSCI stocks index .MILA00000PUS fell nearly 2%, hitting a three-week low, led by Brazilian shares .BVSP.
Elsewhere, Ghana's investors signed off on its proposal to restructure $13 billion worth of international bonds, paving the way for the country to emerge out of a painful 2022 debt default.
HIGHLIGHTS:
** Brazil's Treasury Secretary defends rating upgrade as technically sound
** South Africa introducing visa reforms to boost economy, says minister
** Czech watchdog says 2025 budget draft overestimates income, omits some expenditure
** Polish central bank head hopes rate cuts can start after March projection
** Egypt's GDP growth slows to 2.4% for 2023/24 year- planning ministry
Key Latin American stock indexes and currencies at 1500 GMT:
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1169.62 | -1.54 |
MSCI LatAm .MILA00000PUS | 2209.44 | -1.92 |
Brazil Bovespa .BVSP | 131788.5 | -1.29 |
Mexico IPC .MXX | 51826.42 | -0.72 |
Chile IPSA .SPIPSA | 6353.77 | -0.6 |
Argentina Merval .MERV | 1723589.34 | 0.492 |
Colombia COLCAP .COLCAP | 1300.06 | -0.1 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.4949 | -1 |
Mexico peso MXN= | 19.4999 | -0.51 |
Chile peso CLP= | 918.97 | -0.87 |
Colombia peso COP= | 4205.22 | -0.55 |
Peru sol PEN= | 3.7279 | -0.22 |
Argentina peso (interbank) ARS=RASL | 971.5 | -0.10 |
Argentina peso (parallel) ARSB= | 1195 | 2.09 |
Reporting by Ankika Biswas in Bengaluru; Editing by Kirsten Donovan
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