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EMERGING MARKETS-Mexican peso break losing streak, cenbank cuts rates

 (Updates prices)
    By Susan Mathew and Medha Singh
    Sept 24 (Reuters) - Latin American stocks gained on Thursday
and currencies reversed early losses, with an expected interest
rate cut by Mexico's central bank not hindering the peso's
gains.
    The peso broke a four-session losing streak to rise
1.2% as the dollar lost traction against major rivals.

    Bank of Mexico cut the key benchmark rate by 25 basis points
to 4.25%, in a unanimous decision, citing an environment of
uncertainty and downside risks. This comes after a series of
half percentage point cuts in recent months to support an
economy hammered by the coronavirus pandemic.
    "We believe that Banxico is signaling the capacity and
willingness to ease further, but is introducing greater
importance in the stability of the peso, which is now going to
play a strong role in future policy decisions," said Sacha
Tihanyi, deputy head of EM strategy at TD Securities. 
    "We retain our view that Banxico will ease by two more 25bp
cuts before ending the easing cycle, though also acknowledge the
risk skew that we only see one more 25bp cut, or no further
easing should there be a sustained and rapid strengthening of
the USD." 
    Brazil's real jumped 1.3%. The country's central bank
lifted its 2020 GDP forecast to minus 5.0% from minus 6.4%,
saying the country's COVID-19 crisis entered a less acute phase
in the third quarter.
    The Argentine peso fell to a record low of 147
per dollar on the black market as the beleaguered currency
reeled from the impact of capital controls. Data late on
Wednesday showed Argentina's unemployment rate jumped to 13.1%
in the second quarter, the highest since 2004.

    Tracking a rise on Wall Street, most stock indexes in Latin
America climbed, shaking off weakness from earlier this week.
Chile's IPSA looked to post its best day in over three
weeks, while main indexes in Brazil and Mexico
gained about 1.4% each. 
    But rising COVID-19 cases in the region and indications that
a global economic recovery may be slowing, kept sentiment
fragile. 
    "What we've witnessed over the last few weeks as the third
quarter comes to an end is that fourth quarter is going to be
quite challenging for emerging markets," said Piotr Matys,
emerging markets forex strategist at Rabobank.
    "One of the key reasons is an increase in political
uncertainty before the U.S. elections." 
    
    Key Latin American stock indexes and currencies at 1922 GMT:
  Stock indexes           Latest   Daily %
                                   change
 MSCI Emerging Markets    1058.53    -1.78
                                   
 MSCI LatAm               1865.59     1.73
                                   
 Brazil Bovespa          97100.97     1.43
                                   
 Mexico IPC              36347.38     1.45
                                   
 Chile IPSA               3571.22     1.44
                                   
 Argentina MerVal        42005.55    2.517
                                   
 Colombia COLCAP          1177.59    -0.15
                                   
                                          
      Currencies          Latest   Daily %
                                   change
 Brazil real               5.5162     1.28
                                   
 Mexico peso              22.0950     1.30
                                   
 Chile peso                 784.2    -0.33
                                   
 Colombia peso            3825.75     0.73
                                   
 Peru sol                    3.59    -0.50
                                   
 Argentina peso           75.7700    -0.07
 (interbank)                       
                                   
 
 (Reporting by Medha Singh in Bengaluru; Editing by Chizu
Nomiyama)
  
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