EMERGING MARKETS – Resource-rich Latam markets hit by falling commodity prices

    * Chile's peso slides as much as 1%
    * Mexican cenbank expected to hike by 25bps on Thursday 
    * Petrobras hit by falling oil prices, Vale tracks iron ore

    By Susan Mathew
    Aug 9 (Reuters) - Most Latin American currencies fell on
Monday as fears of slowing global growth and rising cases of the
Delta variant of the coronavirus hit commodity prices, with
Chile's peso sliding to near 10-month lows. 
    The Chilean peso slid as much as 1% as copper prices
slipped on rising risks of a strike at the country's Escondida
copper mine - the world's largest - as well as worries about
demand from biggest consumer China as it lays down more curbs to
combat the spread of the virus.
    The currency has fallen about 6% since mid-July when the
central bank struck a dovish tone after hiking the key interest
rate by 25 basis points to 0.75%.
    However, Credit Suisse analysts expect Chile's interest rate
to rise to 1.5% by the end of the year and 3.0% by the end of
2022. The central bank's next meeting is scheduled for the end
of the month. 
    Oil prices were also hit by curbs in China, sending crude
prices 3% lower. There was a knock-on effect to exporter
Colombia's peso, which fell 0.5% to three-month lows.

    Mexico's peso was little changed after data showed
annual inflation slowed to the lowest level in four months in
July at 5.81%, but still slightly overshot expectations to
remain well above the central bank's target rate, spurring bets
that the benchmark interest rate could be hiked for the second
meeting in a row.
    A Reuters poll reflected expectations the interest rate
would be hiked by 25 basis points to 4.50% on Thursday.

    Brazil's real lost 0.7% from political headwinds
ahead of general elections next year, sliding iron ore prices
and COVID-19 cases now over 20 million.
    As his popularity tumbles, Brazil's far-right President Jair
Bolsonaro ignored calls to drop his feud with the Supreme Court
on Friday amid rising tensions over his unfounded claims the
nation's voting system is vulnerable to fraud.
    MSCI's index of Latin American stocks
slipped 0.6% as Brazilian heavy-weights Petrobras
 and iron ore miner Vale slipped, tracking
oil and iron ore prices, respectively. 
     But most regional stock benchmarks rose, except Mexico's
IPC index, which fell for the fourth straight session led
by losses in material stocks.  
    Key Latin American stock indexes and currencies at 1422 GMT:
   Stock indexes           Latest    Daily %
 MSCI Emerging Markets      1293.56     0.08
 MSCI LatAm                 2475.89    -0.63
 Brazil Bovespa           123046.81     0.19
 Mexico IPC                51095.69    -0.04
 Chile IPSA                 4293.82     0.26
 Argentina MerVal          65620.62   -0.365
 Colombia COLCAP            1227.74     0.09
      Currencies           Latest    Daily %
 Brazil real                 5.2696    -0.69
 Mexico peso                20.0541    -0.15
 Chile peso                   787.9    -0.05
 Colombia peso              3984.32    -0.53
 Peru sol                    4.0999    -0.42
 Argentina peso             96.9900    -0.08
 (Reporting by Susan Mathew in Bengaluru; Editing by Kirsten

About Mallory Brown

Check Also

AfDB cuts India’s growth forecast amid gloomy Asia

BENGALURU/NEW DELHI: The Asian Development Bank on Wednesday lowered its growth forecast for India for …

Leave a Reply

Your email address will not be published.