Latin American currencies slip as markets assess business activity data
Chile's economic activity up 1.1% in May, below forecasts
Brazil's Petrobras hikes jet fuel prices by 3.2%
Latin American stocks down 0.5%, currencies off 1%
Updated at 03:42 p.m. ET/1942 GMT
By Johann M Cherian and Shristi Achar A
July 1 (Reuters) -Currencies across most resource-rich Latin American countries edged loweron Monday followingweaker-than-expected data from the region'smajor economies, while Brazil's real fell to over two-year lows.
MSCI's index tracking Latam currencies .MILA00000CUS fell 1% against the dollar asmarkets awaitedkey U.S. employmentdata later this week.
The realBRL= gave up early gains to shed 0.9%, trading at levels of 2-1/2 years ago, after notching its largest quarterly loss since the COVID-19 pandemic on Friday.
A director ofBrazil's central bank said on Monday that if fiscal policy is always expansionary, it puts a lot of pressure on the floating exchange rate or monetary policy, making disinflation more costly. Data released on Friday showedgovernment debt rose to 76.8% of gross domestic product in May from 76.3% in April.
"The primary deficits we have been seeing are not an exception to the general rule; deficits are in fact expected for the foreseeable future," strategists at Citigroup noted.
Mexico's peso MXN= edged 0.1% lower, extending declines in June when thecurrency notched its biggest quarterly drop since the pandemic. A survey showed business activity in June stood at 51.1, a notch lower than 51.2 in the prior month.
Political uncertainty has raisedconcern aboutfiscal sustainability, central bank independence in Brazil and thatMexico's President-elect Claudia Sheinbaum might undertake judicial reforms.
Chile's peso CLP= lost 0.6%. Anindex tracking domestic economic activity ticked up 1.1% in May on an annual basis, below expectations of2.8%.
"The ongoing drag from still-tight financial conditions, and temporary issues in key sectors, have put a lid on the recovery in recent months. Still, the persistent sluggishness of confidence indicators suggests the upturn will remain sub-par by previous standards," said Andres Abadia, chief Latin America economist at Pantheon Macroeconomics.
Peru's sol PEN= rose0.1% on higher copperprices andbetter-than-expected manufacturing activity data out of top consumer China. MET/L
Inequities, MSCI's index tracking local equity indexes .MILA00000PUS fell 0.5%, though Brazil's Bovespa .BVSP added 0.5%.
Petrobras PETR4.SA gained 1.5% after the state-run oil giant raised jet fuel prices to distributors by an average of 3.2%.
Mexico's main stock index .MXX jumped 0.9%,with Grupo Mexico GMEXICOB.MX up 2.3% on news thatminer Southern Copper SCCO.N will likely finish building its Tia Maria copper project in southern Peru in up to two years and then begin production in 2027.
Key Latin American stock indexes and currencies:
Latest | Daily % change | |
MSCI Emerging Markets .MSCIEF | 1086.04 | -0.02 |
MSCI LatAm .MILA00000PUS | 2167.24 | -0.54 |
Brazil Bovespa .BVSP | 124589.88 | 0.55 |
Mexico IPC .MXX | 52933.48 | 0.94 |
Chile IPSA .SPIPSA | 6383.60 | -0.47 |
Argentina MerVal .MERV | 1584967.04 | -1.634 |
Colombia COLCAP .COLCAP | 1380.90 | 0.31 |
Currencies | Latest | Daily % change |
Brazil real BRBY | 5.6431 | -0.94 |
Mexico peso MXN=D2 | 18.3590 | -0.16 |
Chile peso CLP=CL | 946.2 | -0.62 |
Colombia peso COP= | 4133.5 | 0.37 |
Peru sol PEN=PE | 3.8252 | 0.10 |
Argentina peso (interbank) ARS=RASL | 913.0000 | -0.11 |
Reporting by Johann M Cherian in Bengaluru; Editing by Paul Simao and Richard Chang
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