July 21, 2020 / 6:59 PM / 15 days ago

EMERGING MARKETS-Commodity-linked Latam FX gain; Brazil's real at 1-month high

    * Brazil's real at one-month high after aid to small
    * Investors cheer massive EU stimulus plan
    * Argentine creditors close ranks on debt deal as government

 (Adds details, updates prices)
    By Shreyashi Sanyal and Ambar Warrick
    July 21 (Reuters) - Brazil's real jumped to a near one-month
high on Tuesday after the central bank announced more stimulus
measures, while most other Latin American currencies gained on
strength in the commodity market. 
    The real was set for its best day since early
June as the central bank launched a program aimed at providing
up to 120 billion reais ($23 billion) in loans to small and
medium-sized enterprises, which have struggled to access credit
during the COVID-19 pandemic.
    Both the Mexican and Colombian pesos rose in
tandem with oil prices, while Chile's currency tracked
higher copper prices.
    Global risk appetite was bolstered by a historic deal by
European Union leaders on a massive stimulus plan for their
coronavirus-hit economies, while markets continued to bet on a
COVID-19 vaccine being developed this year.

    "Fiscal policy remains the center of attention, reflecting
the broader push toward growth-enhancing policies in the wake of
COVID," said Mark McCormick, global head of FX strategy at TD
Securities. "This global factor underscores that local stories
have given way to broader themes." 
    Markets were also watching for further stimulus measures
from the United States.
    In Latam equities, Brazilian stocks traded flat as
gains in the energy sector were matched by losses in Vale
, after the iron ore miner warned that its annual
output would likely be at the lower end of its guidance range.

    Brazilian state-owned oil company Petrobras
gained 2.5% after it agreed to sell its remaining 10% stake in
natural gas pipeline company TAG to Engie Brasil and
Canadian investment fund Caisse de Depot et Placement du Quebec
late on Monday.
    Argentina's peso was rangebound after the government
rejected a counterproposal from the country's three main
creditor groups on Monday to revamp around $65 billion in
foreign debt, doubling down on its own "final" offer as
bondholders appeared to close ranks.
    However, analysts say the country and its creditors are
likely to find a way to seal a debt restructuring deal despite
the standoff.
    Stocks in the country surged more than 3%. 
    Ecuador pushed forward with its debt overhaul plans on
Monday, requesting a vote among its creditors on reconfiguring
the terms of $17.4 billion of its external bonds, with its
largest group of creditors backing the proposal.   
    Key Latin American stock indexes and currencies: 
    Stock indexes             Latest      Daily % change
 MSCI Emerging Markets         1088.60                2.26
 MSCI LatAm                    2081.07                3.05
 Brazil Bovespa              104361.41               -0.06
 Mexico IPC                   36936.58                1.69
 Chile IPSA                    3887.01               -0.96
 Argentina MerVal             47272.34               3.479
 Colombia COLCAP               1168.21                1.04
       Currencies             Latest      Daily % change
 Brazil real                    5.1802                3.09
 Mexico peso                   22.2940                0.83
 Chile peso                      771.9                1.62
 Colombia peso                  3620.9                0.61
 Peru sol                       3.4938                0.25
 Argentina peso                71.7100               -0.07

 (Reporting by Shreyashi Sanyal in Bengaluru; Editing by Dan
Grebler and Leslie Adler)
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