Real poised for biggest qtrly drop since pandemic
Updated at 1457 GMT
Argentina passes economic reform bill
Colombia interest rate decision on tap
Brazil's BTG Pactual buys US-based M.Y. Safra Bank
Latam stocks, FX off 0.1% each
By Johann M Cherian
June 28 (Reuters) -Brazil's real led declines among Latin American currencies on Friday and was set for its biggest quarterly drop since January 2020 as investors weighed fiscal and political uncertainty in the region's biggest economy.
The currency BRL= depreciated over 1% and was on track for its biggest monthly drop in nearly two years.
Latest data showed government debt as a share of gross domestic product rose to 76.8% in May from 76.3% the month before, while President Luiz Inacio Lula da Silva launched fresh barbs on the central bank's monetary policy.
"There is a lot of noise in terms of politics, and the unwillingness of the government to cut some expenses in order to bring fiscal expenditure down in the coming years is making investors uneasy," said Andres Abadia, chief Latam economist at Pantheon Macroeconomics.
MSCI's index tracking Latam currencies .MILA00000CUS slipped 0.1% against the dollar and was on track for a loss of over 5% on both a monthly and quarterly basis.
Political uncertainty following elections in Mexico, a hawkish tilt in Brazilian monetary policy and the U.S. Federal Reserve's delay to kick off interest rate cuts have weighed on sentiment.
Colombia's peso COP= appreciated 0.8% ahead of a central bank monetary policy decision later in the day, with analysts expecting a 50-basis point reduction.
Mexico's peso MXN= bounced 0.9% snapping a three day losing streak.
Copper producer Chile's peso CLP= strengthened 1.2% as prices of the red metal ticked higher. Data showed unemployment in the country rose 8.3% in May lower expectations of 8.5%.
Yield on Argentina's dollar bond due in 2029 .040114HX1=1M slipped over 14 basis points. The country's lower house approved economic reform measures proposed by President Javier Milei, giving him his first big legislative win just over six months after taking office.
MSCI's index tracking Latam equities .MILA00000PUS slipped 0.2%, and was on track for a monthly loss of 7% and a drop of 14% for the second quarter.
Brazil's Bovespa .BVSP slipped 0.4%, with BTG Pactual BPAC11.SA dropping 1.4% after the investment lender signed definitive documents to buy U.S.-based lender M.Y. Safra Bank.
Petrobras PETR4.SA added 0.4% after the state-run oil firm elected Fernando Melgarejo as the firm's chief financial officer.
Elsewhere, India's rupee INR=IN inched up 0.1% aided by likely passive funds buying into government bonds upon their inclusion in the widely-tracked JPMorgan emerging market debt index.
Abhishek Bisen, head of fixed income at Kotak Mahindra AMC said that there is a possibility of additional inflows of $2-$5 billion over the next nine months as the south Asian nation's debt garners attention from active fund managers as well.
Key Latin American stock indexes and currencies:
Latin American market prices from Reuters | ||
Stock indexes | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1086.25 | 0.4 |
MSCI LatAm .MILA00000PUS | 2179.74 | -0.09 |
Brazil Bovespa .BVSP | 123796.13 | -0.41 |
Mexico IPC .MXX | 52372.24 | 0.12 |
Chile IPSA .SPIPSA | 6482.98 | -0.33 |
Argentina MerVal .MERV | 1619375.44 | -0.996 |
Colombia COLCAP .COLCAP | 1375.74 | -0.07 |
Currencies | Latest | Daily % change |
Brazil real BRBY | 5.5576 | -0.90 |
Mexico peso MXN=D2 | 18.2706 | 0.81 |
Chile peso CLP=CL | 942.9 | 1.08 |
Colombia peso COP= | 4140.12 | 0.76 |
Peru sol PEN=PE | 3.8286 | -0.23 |
Argentina peso (interbank) ARS=RASL | 911.5000 | 0.00 |
Argentina peso (parallel) ARSB= | 1325 | 2.26 |
Reporting by Johann M Cherian in Bengaluru;
Editing by Alistair Bell
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