Latam FX drop as macroeconomic worries, Trump fears linger
Updated at 1507 GMT
Vale sees iron ore output at high-end of 2024 guidance
Brazil Senate committee delays vote on c.bank financial autonomy
Latam stocks, FX off 0.7% each
By Johann M Cherian
July 17 (Reuters) - The Colombian and Chilean pesos led declines among most Latin American currencies on Wednesday, as uncertainty around fiscal stability, interest rates and a possible second term for U.S. President Donald Trump dampened risk taking.
MSCI's index tracking Latin American currencies .MILA00000CUS slipped 0.7%, though the dollar weakened. The index had jumped 0.6% in the previous session.
However, the greenback's depreciation saw other currencies including Japan's yen JPY= and UK's sterling GBP=, appreciate sharply. USD/
Colombia's peso COP= depreciated 0.8% and was poised for its biggest daily drop in three weeks, with concerns around fiscal stability of the oil producer remaining a pain point for investors.
Brazil's real BRL= slipped 0.6% as prices of iron ore, a top export, slumped to a nearly three-week low, undermined by weak seasonal demand from top consumer China and mounting global supply. IRN/
Separately, a Senate committee delayed the analysis of a constitutional amendment proposal that would grant financial autonomy to the central bank, which was sponsored by conservative lawmakers but opposed by President Luiz Inacio Lula da Silva's government.
Worries of political interference in central bank policy making had sparked a real sell-off in late June.
Mexico's peso MXN= dropped 0.4%, while Chile's peso CLP= fell nearly 1%.
Investors mulled the possible repercussions on U.S. trade with the region, along with migration and security if Trump were to return to the White House.
Further, Brazil, Mexico and Colombia are led by left-leaning administrations, which analysts fear could result in possible policy misalignments under a Trump administration.
"We're in a moment of adjustment. You have to think about the stability of the United States as well as how that feeds into Latin America down the line," said Juan Perez, director of trading at Monex USA.
"The Joe Biden administration has allowed for a lot of free trade flow, but if it's more controlled (under Trump) and more towards trying to drive American exports, then that puts a lot of negative pressure on Latin America."
Meanwhile, MSCI's gauge tracking regional bourses .MILA00000PUS dropped 0.7%, and was down over 13% year-to-date as regional central banks continue to wait for the U.S. Federal Reserve to kick off its monetary policy easing cycle.
Brazil's Bovespa .BVSP inched up 0.2%, limited by Vale's VALE3.SA 0.6% loss, despite the mining giant expressing confidence that it would reach the high-end of its 2024 guidance for iron ore production after output increased in the second-quarter.
Mexico's main stock index .MXX lost 0.5%, while Colombia's Colcap .COLCAP edged up 0.1%.
Key Latin American stock indexes and currencies:
Latin American market prices from Reuters | ||
Stock indexes | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1112.26 | -0.46 |
MSCI LatAm .MILA00000PUS | 2310.43 | -0.69 |
Brazil Bovespa .BVSP | 129450.99 | 0.26 |
Mexico IPC .MXX | 54136.96 | -0.42 |
Chile IPSA .SPIPSA | 6547.26 | -0.28 |
Argentina MerVal .MERV | 1523056.44 | -0.21 |
Colombia COLCAP .COLCAP | 1375.60 | 0.14 |
Currencies | Latest | Daily % change |
Brazil real BRBY | 5.4641 | -0.65 |
Mexico peso MXN=D2 | 17.7458 | -0.47 |
Chile peso CLP=CL | 920.9 | -1.41 |
Colombia peso COP= | 4008.32 | -0.75 |
Peru sol PEN=PE | 3.723 | -0.63 |
Argentina peso (interbank) ARS=RASL | 922.5000 | 0.05 |
Argentina peso (parallel) ARSB= | 1410 | -0.35 |
Reporting by Johann M Cherian in Bengaluru
Editing by Alistair Bell
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