Latam markets lead broader EM recovery; Brazil's real jumps after inflation data
Updated at 1530 GMT
Brazil inflation rises in July
Mexican peso rises after rate cut, Peruvian sol falls
Argentina's Merval leads weekly gains in Latam
Ukraine begins formal approval process for bond restructuring
By Lisa Pauline Mattackal
Aug 9 (Reuters) -Latin American stocks and currencies climbed on Friday, continuing a strong day for emerging markets as easing worries about U.S. economic growth helped risk assets regain some ground, while Brazil's real led regional currency gains after higher-than-expected inflation figures.
MSCI's Latin American stocks index .MILA00000PUS leapt 2.2% on the day, while the regional currency index .MILA00000CUS gained 1.6%.
The indexes were heading for 5% and 3.2% gains for the week, respectively. The share index is on track for its best week since October 2023, and the currency index for its best since March 2023, erasing losses from a steep selloff earlier in the week.
Both have outperformed the broader emerging markets stocks .MSCIEF and currency indexes .MIEM00000CUS, both also on course for weekly gains.
Brazil's real jumped 0.8% to a three-week high against the dollar =USD, leading regional currency gains after data showed consumer prices rose 0.38% in July, accelerating from 0.21% in June and exceeding economists' forecasts.
Brazil's central bank minutes released earlier in the week showed policymakers are prepared to hike interest rates again if inflation worsens.
Mexico's peso MXN= rose 0.2% against the dollar after its central bank cut interest rates on Thursday but signaled it expected higher inflation.
"The balance of risks did not change. We continue to forecast three additional 25bp rate cuts until the end of 2024," economists at Goldman Sachs wrote in a note.
Mexico's peso was among the worst-hit currencies during a turbulent week that followed a global selloff on Monday in response to some poor U.S. economic data that deepened worries about slowing global growth and sparked a massive unwinding of yen-funded carry trades.
U.S. jobless claims data on Thursday helped risk assets recover, while stronger China inflation data also helped soothe worries about deflation in the world's second largest economy.
However, Peru's sol PEN=PE lagged regional peers, losing 0.4% after an unexpected interest rate cut on Thursday.
Meanwhile, the Russian rouble weakened over 2.3% against the dollar RUB=, according to LSEG data, touching a near one-month low.
"Escalating fighting between Russian and Ukrainian troops in Russia’s Kursk region are most likely the source of selling pressure on the rouble," said Piotr Matys, senior currency analyst at InTouch Capital Markets.
Elsewhere, Ukraine began the formal creditor approval process of its offer to restructure its roughly $20 billion of international bonds.
The Israeli shekel ILS= firmed against the dollar to its strongest in over a week, with the dollar losing 1.4% against the Israeli currency.
Emerging market equities have seen inflows of $2.3 billion over the past 10 weeks, according to data from Bank of America Global Research. However, EM debt has seen outflows for the past two weeks.
Key Latin American stock indexes and currencies
MSCI Emerging Markets .MSCIEF | 1063.31 | 1.62 |
MSCI LatAm .MILA00000PUS | 2238.75 | 2.24 |
Brazil Bovespa .BVSP | 129695.43 | 0.8 |
Mexico IPC .MXX | 52891.87 | 0.03 |
Chile IPSA .SPIPSA | 6330.85 | 0.59 |
Argentina Merval .MERV | 1557735.67 | 1.788 |
Colombia COLCAP .COLCAP | 1309.72 | 0.81 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.5064 | 0.77 |
Mexico peso MXN= | 18.824 | 0.19 |
Chile peso CLP= | 931.81 | 0.36 |
Colombia peso COP= | 4066.88 | -0.2 |
Peru sol PEN= | 3.722 | -0.35 |
Argentina peso (interbank) ARS=RASL | 936.5 | 0 |
Argentina peso (parallel) ARSB= | 1345 | 2.230483271 |
Mexican peso slumps as yen jumps https://tmsnrt.rs/4deSzi1
Reporting by Lisa Mattackal in Bengaluru; Editing by Tomasz Janowski
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