Chile's peso leads Latam FX lower as commodity prices slide
Updated at 1505 GMT
Argentina signs off on $21.66 billion in fiscal liquidity bills
Mexico's Arca Continental Q2 core profit ticks up
China reaffirms policy goals, offers no implementation details
Latam stocks down 1.7%, FX off 1.2%
By Johann M Cherian
July 18 (Reuters) -Chile's peso led losses across resources-rich Latin America on Thursday, tracking a decline in prices of base metals and crude oil, while underlying macroeconomic issues and uncertainty around U.S. elections also loomed.
World's biggest copper producer Chile's peso CLP= depreciated 1.6% to hit a one-week low, as prices of the red metal neared three-month lows without new stimulus from a key political meeting in China and investors switching from copper to gold to bet on earlier interest rate cuts by the U.S. Federal Reserve. MET/L
Brazil's real BRL= weakened 1.1% to a two-week low, as prices of iron ore, the country's top export, extended previous session's losses.
Pesos of Mexico MXN= and Colombia COP= also slipped 1.1% and 0.6%, respectively, as crude prices declined. O/R
A broader gauge for regional currencies .MILA00000CUS also dropped 1.2% to over a one-week low, against a firmer dollar.
Most currencies in the region are heading for weekly losses between 1% and 3% as traders reacted to a possible second term for U.S. Presidential candidate Donald Trump, who's policies on trade, security and immigration are seen as negative for Latin American economies, most of which are led by left-leaning governments.
Further, excessive fiscal spending in economies like Brazil and Colombia and uncertainty on the pace of interest rate cuts have weighed on risk taking.
"It is going to be an extremely complicated second-half of the year for central banks and some of them will have to tread carefully (on interest rate decisions)," Andres Abadia, chief Latam economist at Pantheon Macroeconomics said.
"The political situation in the U.S. is also volatile and that obviously means that central banks in the region will have to be careful in terms of monetary policy".
Meanwhile, MSCI's index tracking regional bourses .MILA00000PUS weakened 1.6%, to a one-week low, with Brazil's Bovespa .BVSP falling nearly 1%.
Mexico's main stock index .MXX edged up 0.1%. Arca Continental AC.MX declined nearly 1% despite the bottler posting upbeat second-quarter core profit, bolstered by positive volume performance.
Elsewhere, Chinese bond yields across the board CN2YT=RR, CN5YT=RR, CN10YT=RR, CN30YT=RR and the yuan CNY=CFXS were broadly flat after leaders reiterated their wide-ranging economic policy goals without detailing implementation steps.
Analysts said that the plenum outcome pointed to continuity, rather than any shifts in policymaking or the economic growth model China pursues.
Yields on Argentine dollar bonds 040114HX1=1M, 040114HV5=1M, 040114HT0=1M slipped between 13 and 26 basis points. The local government gave the green light to issue up to 20 trillion pesos ($21.66 billion) in a one-year fiscal liquidity bill, its latest move to mop up excess peso trading.
Key Latin American stock indexes and currencies:
Latin American market prices from Reuters | ||
Stock indexes | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1106.11 | -0.48 |
MSCI LatAm .MILA00000PUS | 2267.49 | -1.76 |
Brazil Bovespa .BVSP | 128350.59 | -0.85 |
Mexico IPC .MXX | 53784.14 | 0.07 |
Chile IPSA .SPIPSA | 6599.34 | 0.47 |
Argentina MerVal .MERV | 1533793.30 | 0.61 |
Colombia COLCAP .COLCAP | 1365.39 | -0.06 |
Currencies | Latest | Daily % change |
Brazil real BRBY | 5.5445 | -1.09 |
Mexico peso MXN=D2 | 17.8550 | -0.91 |
Chile peso CLP=CL | 940.2 | -1.57 |
Colombia peso COP= | 4039.65 | -1.18 |
Peru sol PEN=PE | 3.7317 | -0.56 |
Argentina peso (interbank) ARS=RASL | 923.0000 | 0.05 |
Argentina peso (parallel) ARSB= | 1440 | 1.04 |
Reporting by Johann M Cherian in Bengaluru; editing by David Evans
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