Most Latam FX set for weekly gains on China stimulus boost
Brazil stresses need for coordination between monetary, fiscal policies
Brazil's jobless rate drops to 6.6% in quarter through August
Argentina poverty rate soars over 50% as Milei austerity bites
Ghana slashes key rate as inflation outlook improves
Latam FX down 0.2%, stocks down 0.5%
Updated at 3:18 p.m. ET/1918 GMT
By Ankika Biswas
Sept 27 (Reuters) -Most Latin American currencies were set for weekly gains on Friday, with Chile's peso outperforming as metal prices firmed on the back of improving China demand prospects after Beijing unveiled a raft of stimulus measures this week.
A key Latin American currencies index on Friday was on track for its first fourth straight weekly gain since June 2023, with Chile's peso at the forefront following rallying metal prices on hopes of improving China demand.
Top copper producer Chile's peso CLP= has strengthened more than 3% against the dollar this week, as prices of the red metal were set for their best weekly gain in more than four months.
No. 2 copper producer Peru's sol PEN= also rose nearly 1% for the week.
The MSCI index tracking Latam currencies .MILA00000CUS has jumped more than 3% in its four weeks of advance, as economic stimulus measures in top metals consumer China improved the demand outlook for metals and sent their prices sharply higher.
Most emerging market stocks and currencies have been riding on optimism around a Federal Reserve interest rate cut, which was met by a larger-than-usual 50-basis-point reduction last week that further deepened investors' risk appetite. The MSCI EM stocks index .MSCIEF logged its best weekly performance in nearly four years.
Among others, Brazil's real also climbed 1.3% against the dollar on a weekly basis, as iron ore future prices logged an over 10% weekly gain.
However, the currency was largely flat on the day, with data showing the country's jobless rate in the three months through August dropped to at least a 13-year low, reinforcing labor market strength.
"While the labor market remains resilient, we believe this trend is unsustainable and expect a gradual deterioration over the next three to six months," said Andrés Abadía, chief Latam economist at Pantheon Macroeconomics.
"Domestic policy uncertainty and challenging external conditions are adversely affecting key sectors and likely constraining job-market expansion."
Further, Brazil's central bank chief Roberto Campos Neto said tighter interest rates alongside looser fiscal policy create inefficiencies that hinder the transmission of monetary policy, leading to a prolonged period of higher borrowing costs.
Meanwhile, ratings agency Fitch said Brazil's better-than-expected economy has not translated into stronger public finances, forecasting a tougher 2025 and a steeper rise in the country's public debt.
Colombia's peso COP= edged 0.2% lower, ahead of the country's monetary policy decision on Monday, with analysts split on the likelihood of a 50- or 75-bps rate cut.
However, the currency, along with Mexico's peso MXN= were on track for weekly declines as oil prices were set for a weekly fall.
Among the other key events over the week's course was a 25-bps cut by the Bank of Mexico, its second straight reduction amid easing inflation.
Elsewhere, Ghana slashed its main interest rate by 200 basis points to 27%, its first rate cut since January.
HIGHLIGHTS:
** Brazil tops expectations with 232,513 formal jobs created in August
** Pakistan inflation to slow down in the range of 8%-9% in near term - government report
** Zambia targets smaller budget deficit in 2025- finance minister
Key Latin American stock indexes and currencies:
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1175.94 | 1.08 |
MSCI LatAm .MILA00000PUS | 2257.31 | -0.53 |
Brazil Bovespa .BVSP | 132780.96 | -0.17 |
Mexico IPC .MXX | 52896.67 | -1.29 |
Chile IPSA .SPIPSA | 6530.08 | 0 |
Argentina Merval .MERV | 1728883.39 | 0.77 |
Colombia COLCAP .COLCAP | 1320.36 | -0.85 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.4368 | 0.01 |
Mexico peso MXN= | 19.7308 | -0.61 |
Chile peso CLP= | 899.65 | 0.13 |
Colombia peso COP= | 4177.48 | -0.22 |
Peru sol PEN= | 3.702 | 0.21 |
Argentina peso (interbank) ARS=RASL | 966 | 0.155279503 |
Argentina peso (parallel) ARSB= | 1225 | 0.408163265 |
Reporting by Ankika Biswas and Shashwat Chauhan in Bengaluru; Editing by Andrea Ricci and Aurora Ellis
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