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Shreyashi Sanyal

EMERGING MARKETS-Brazil's real weakens ahead of expected rate cut; Mexican peso snaps losing run

1:32am IST

* Brazil central bank seen cutting rates to record low of 2% * Brazil PMIs show economic activity falls in July for 5th month * Nearly 5 mln people returned to work in Mexico in June - poll * Mexican peso up for the first time in eight sessions (Updates prices) By Shreyashi Sanyal and Susan Mathew Aug 5 Most Latin American currencies rose against a weaker dollar on Wednesday, while Brazil's real fell ahead of what is expected to the central bank's final interest rate cut in its one-year long easing cycle. The real fell 0.3% against the dollar as Copom, the central bank's rate-setting committee, is set to cut its key interest rate to a record low of 2.00% at market close in a final 25 basis points move to cushion an economic collapse. "Following the massive collapse in growth caused by COVID, the current economic indicators in Brazil are signaling an economic recovery, but pre-crisis levels are still a long way off," said Alexandra Bechtel, forex and emerging markets analyst at Commerzbank. "The bar is set high for further rate cuts, in particular as more stable framework conditions (budget deficit etc.) would be required for lower rate levels." Economic activity in Brazil contracted in July for a fifth straight month, a survey showed, a result of the dominant services sector still struggling under the weight of the COVID-19 crisis. Economy Minister Paulo Guedes on Wednesday said Brazil may reduce its new VAT tax to as much as 8% if the proposed 12% rate ends up increasing the country's overall tax burden. The VAT proposal was the first part of the government's wider tax reform agenda. Sao Paulo listed stocks snapped a four-day losing streak on a commodity boost as oil and metal prices soared. Even as Latin American assets recovered sharply from March lows, economists at Scotiabank say it will take several quarters for the economies to return to pre-COVID-19 levels of economic activity even with strong growth into 2021. The heavily controlled Argentine peso was range-bound a day after the country reached a deal with creditors to restructure $65 billion of sovereign debt. The Merval stock index continued to fall after its strong surge post the deal. Argentina's June industrial production fell at a much slower pace than the previous month and lesser that analysts expectation, data showed on Wednesday. Crude exporter Mexico's peso rose for the first time in seven sessions, gaining more than 1% as the greenback extended declines. Data on Wednesday showed nearly 5 million people returned to work in Mexico in June, though formal unemployment continued to rise. Mexican stocks added 1.2%, as silver miner Peñoles , soared 13.7% on rising prices of precious metals. Key Latin American stock indexes and currencies at 1943 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1103.25 1.25 MSCI LatAm 2043.46 2.07 Brazil Bovespa 102889.09 1.65 Mexico IPC 37957.01 1.31 Chile IPSA 3934.13 0.2 Argentina MerVal 50999.69 -2.274 Colombia COLCAP 1136.94 0.76 Currencies Latest Daily % change Brazil real 5.2977 -0.28 Mexico peso 22.3620 1.27 Chile peso 777.1 -0.72 Colombia peso 3774.73 0.13 Peru sol 3.5438 0.19 Argentina peso 72.6100 -0.06 (interbank) (Reporting by Shreyashi Sanyal in Bengaluru Editing by Marguerita Choy and Lisa Shumaker)

EMERGING MARKETS-Latam assets rise; Brazil's real steady ahead of expected rate cut

05 Aug 2020

* Brazil central bank seen cutting rates to record low of 2% * Most Latam currencies rise against weakening dollar * Petrobras lifts Bovespa as oil prices jump By Shreyashi Sanyal Aug 5 Most Latin American currencies rose against a weaker dollar on Wednesday, while Brazil's real remained steady ahead of what is expected to the central bank's final interest rate cut in its one-year long easing cycle. The real firmed 0.2% against the dollar as Copom, the central bank's rate-setting committee, is set to cut its key interest rate to a record low of 2.00% later in the day in a final 25 basis points move to cushion an economic collapse. The cut would be the ninth of an easing cycle that started a year ago, as policymakers initially sought to boost the economy in light of President Jair Bolsonaro's poor results in attracting more investment at the beginning of his term. "Following the massive collapse in growth caused by COVID, the current economic indicators in Brazil are signaling an economic recovery, but pre-crisis levels are still a long way off," said Alexandra Bechtel, forex and emerging markets analyst at Commerzbank. "The bar is set high for further rate cuts, in particular as more stable framework conditions (budget deficit etc.) would be required for lower rate levels." Economic activity in Brazil contracted in July for a fifth straight month, a survey of purchasing managers' activity showed, a result of the dominant services sector still struggling under the weight of the COVID-19 crisis. Mexico's peso rose for the first time in seven sessions, gaining more than 1% as the greenback extended declines after a U.S. coronavirus relief package stalled in Congress. A jump in oil prices on a drop in U.S. crude inventories, also supported the Mexican peso as well as oil-exporter Colombia's peso. Even as Latin American assets recovered sharply from March lows, a bounce back to pre-pandemic levels is yet to happen. Economists at Scotiabank say it will take several quarters to return to pre-COVID-19 levels of economic activity even with strong growth into 2021. Stocks in the region outperformed emerging market peers, with MSCI's gauge for Latin American equities surging 2.7%. Brazil's Bovespa led the gains with a 2% rise, as energy company Petrobras jumping more than 6%, tracking higher crude prices. Mexican stocks added 1.2%, as mining company Industrias Peñoles, one of the world's largest silver producers, soared 11% on rising prices of precious metals. Argentina's peso was rangebound a day after reaching an agreement with creditors to restructure around $65 billion in sovereign debt. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 1102.65 1.2 MSCI LatAm 2055.45 2.66 Brazil Bovespa 103366.60 2.12 Mexico IPC 37844.48 1.01 Chile IPSA 3971.34 1.15 Argentina MerVal 53406.73 2.339 Colombia COLCAP 1143.23 1.31 Currencies Latest Daily % change Brazil real 5.2748 0.16 Mexico peso 22.4322 0.96 Chile peso 776.2 -0.61 Colombia peso 3778.14 0.03 Peru sol 3.5447 0.17 Argentina peso 72.6100 -0.06 (interbank) Argentina peso 125 2.40 (parallel) (Reporting by Shreyashi Sanyal in Bengaluru Editing by Marguerita Choy)

EMERGING MARKETS-Most currencies rise against dollar, Turkey's lira slides

05 Aug 2020

Aug 5 Most emerging market currencies continued their advance against a weaker dollar on Wednesday, while Turkey's lira fell more than 1% as concerns remained about the central bank's depleted forex reserves and higher foreign debt obligations.

EMERGING MARKETS-Chilean peso set for best month ever; Brazil's real slips

01 Aug 2020

* Chilean peso bests regional peers with 8.6% jump in July * Colombia cuts interest rate, sees steeper economic contraction * Brazil's real pressured by record deficit, debt figures * Colombia's peso lags in July on oil price outlook (Updates Prices) By Shreyashi Sanyal and Susan Mathew July 31 Chile's peso rose on Friday and was set for its best month on record, aided by improving signs of demand for copper from top consumer China, while the Brazilian real weakened after central bank figures showed a record rise in national debt. The peso gained 0.6% and outperformed its regional peers with an 8.6% jump in July. Prices of copper, Chile's biggest export, ticked higher after strong factory activity data from China. Prolonged lockdown restrictions in Chile have also helped contain the spread of the novel coronavirus in the country. Capital Economics analysts say Chile is seeing the fastest decline in new per capita coronavirus cases of any major emerging market. "If this trend continues, the drag from cautious household behavior may fade more quickly in Chile than elsewhere in the region." MSCI's index for Latin American currencies rose 5% in July, set for its biggest monthly gain in 2020 after the dollar tracked its worst month in a decade, on doubts over a U.S. economic rebound as the country struggles to contain its coronavirus outbreak. Colombia's peso dropped after the central bank cut Colombia's interest rate by 25% as expected, and now expects gross domestic product to contract between 6% and 10% this year, worse than a previous range of 2% to 7%. The currency lagged its regional peers in July, hit by a worsening outlook for oil prices tied to a decline in demand from the United States. Brazil's real fell 1% after the country's national debt rose to a record 85.5% of gross domestic product and the public sector registered a record $36.5 billion primary deficit in June. Latin America's biggest economy's currency was still set for a monthly gain of nearly 5%, with investors keeping a close eye around developments on a new tax reform. Economy ministry estimates say the creation of a new value-added tax in Brazil by combining two federal taxes paid by companies could generate up to 373,000 jobs. The Mexican peso continued to decline for the second straight day, after data showed the economy shrunk by a record-breaking 17.3% during the second quarter. The currency was still up for the month. Except Mexico's Ipc, most major stock indexes in the region rose this month as hopes of a COVID-19 vaccine and ample global stimulus drove hopes of an economic recovery. On Friday, however, most indices fell with Brazil's Bovespa set for its worst day in over a month. Key Latin American stock indexes and currencies at 1846 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1077.30 -0.44 MSCI LatAm 2059.29 -2.03 Brazil Bovespa 102857.64 -2.05 Mexico IPC 36774.44 -0.98 Chile IPSA 3963.37 0.25 Argentina MerVal 49318.00 -0.178 Colombia COLCAP 1151.75 -1.11 Currencies Latest Daily % change Brazil real 5.2103 -1.03 Mexico peso 22.2130 -0.94 Chile peso 756.9 0.53 Colombia peso 3731.91 -0.29 Peru sol 3.5317 -0.56 Argentina peso 72.3100 -0.07 (interbank) (Reporting by Shreyashi Sanyal in Bengaluru Editing by Paul Simao and Jonathan Oatis)

EMERGING MARKETS-Chilean peso set for best month ever; Brazil's real slips

31 Jul 2020

* Chilean peso bests regional peers with 8.6% jump in July * Brazil's real pressured by record deficit, debt figures * Colombia's peso lags in July on oil price outlook * Colombian central bank rate decision eyed By Shreyashi Sanyal July 31 Chile's peso rose on Friday and was set for its best month on record, aided by improving signs of demand for copper from top consumer China, while the Brazilian real weakened after central bank figures showed a record rise in national debt. The peso gained 0.5% during the session and outperformed its regional peers with an 8.6% jump in July. Prices of copper, Chile's biggest export, ticked higher after strong factory activity data from China. Prolonged lockdown restrictions in Chile have also helped in containing the spread of the novel coronavirus in the country. Capital Economics analysts say Chile is seeing the fastest decline in new per capita coronavirus cases of any major emerging market. "If this trend continues, the drag from cautious household behavior may fade more quickly in Chile than elsewhere in the region." Commodity-linked currencies in Latin America have risen in recent months due to a pick-up in demand in China, which is the region's biggest importer of agricultural products and metals. The MSCI's index for Latin American currencies rose 5.2% in July, set for its biggest monthly gain in 2020 after the dollar tracked its worst month in a decade, on doubts over a U.S. economic rebound as the country struggles to contain its coronavirus outbreak. Emerging market currencies have also seen buying in July on a weakening U.S. dollar and excess liquidity stemming from stimulus packages in developed markets. Brazil's real fell more than 1% after the country's national debt rose to a record 85.5% of gross domestic product and the public sector registered a record $36.5 billion primary deficit in June. The currency of Latin America's biggest economy was still set for a monthly gain of nearly 5%, with investors keeping a close eye around developments on a new tax reform. Economy ministry estimates say the creation of a new value-added tax in Brazil by combining two federal taxes paid by companies could generate up to 373,000 jobs. The Mexican peso continued to decline for the second straight day, after data showed the economy shrunk by a record-breaking 17.3% during the second quarter. The currency was still up for the month. Colombia's peso lagged its regional peers in July, hit by a worsening outlook for oil prices tied to a decline in demand from the United States. Market participants also awaited a policy decision from Colombia's central bank, which is expected to cut its benchmark interest rate for the fifth consecutive month by 25 basis points later on Friday. Key Latin American stock indexes and currencies: Stock Latest Daily % change indexes MSCI Emerging Markets 1077.76 -0.4 MSCI LatAm 2070.46 -1.5 Brazil Bovespa 103862.85 -1.09 Mexico IPC 36754.71 -1.03 Chile IPSA 3970.55 0.44 Argentina MerVal 49071.78 -0.676 Colombia COLCAP 1156.25 -0.72 Currencies Latest Daily % change Brazil real 5.2177 -1.17 Mexico peso 22.1670 -0.74 Chile peso 757.4 0.46 Colombia peso 3732.36 -0.30 Peru sol 3.5248 -0.37 Argentina peso (interbank) 72.3100 -0.07 Argentina peso (parallel) 132 2.27 (Reporting by Shreyashi Sanyal in Bengaluru Editing by Paul Simao)

EMERGING MARKETS-Currencies set for best month in 2020 as dollar languishes

31 Jul 2020

* Doubts over U.S. economic recovery keep dollar at 2-year low

EMERGING MARKETS-Mexican peso slides on record GDP contraction; Brazil's real outperforms

31 Jul 2020

* Coronavirus may cost Latin America and Caribbean a decade -ECLAC * Mexico's GDP falls to record 17.3% in second quarter * Brazil hits record 69,000 daily coronavirus cases * Argentina may delay debt restructuring deadline amid impasse (Updates prices) By Shreyashi Sanyal and Susan Mathew July 30 Mexico's peso fell on Thursday after data showed Latin America's second biggest economy contracted by double digits in the second quarter, while a better economic outlook for Brazil saw its currency outperform. Preliminary figures from the INEGI national statistics agency showed Mexico's gross domestic product shrank 17.3% in the second quarter from the previous three months, the sharpest drop on record. The peso weakened 0.5% against the dollar. With Mexico still struggling with its coronavirus outbreak, and the U.S. recovery seemingly losing steam, the rebound in Mexico's economy will be slow over the coming quarters, said Nikhil Sanghani, assistant economist at Capital Economics. Sanghani also said the data bolsters bets for the Mexican central bank to continue its easing cycle. "We expect a total of 100bp of further rate cuts this year, including a 50bp reduction at the central bank's next meeting in August," he said. The dollar fell after U.S. President Donald Trump suggested delaying presidential elections in November, adding to uncertainty amid a historic contraction in U.S. economy in the second quarter as the COVID-19 pandemic shattered consumer and business spending. For Latin America, the coronavirus crisis could set back the region and the Caribbean by a decade as countries endure faltering economies and rising poverty, the U.N. economic commission for the region and the World Health Organization said. While currencies in other parts of Latin America were firmly in the red, Brazil's real rose 0.3% even as the country set daily records on Wednesday for new COVID-19 cases and deaths. Brazil's Economy Ministry on Thursday lowered its 2020 public sector deficit and national debt outlook, reflecting a less severe fall in the economy this year than previously anticipated. The Colombian peso dropped as oil prices declined, and as a Reuters poll showed Colombia's economy will have suffered the worst contraction in its history in the second quarter because of fallout from a coronavirus quarantine. In Argentina, the government is considering pushing back a deadline for creditors to respond to its foreign debt restructuring proposal until mid-to-late August, a source close to the negotiations told Reuters on Wednesday. The MSCI's Latin American stocks index fell 1.5%, with Brazil's Bovespa off 0.8% and Santiago shares off 1.4%. Brazilian car rental company Localiza jumped almost 11% after it said it expects profit margins to recover by September. Key Latin American stock indexes and currencies 1857 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1082.70 -0.36 MSCI LatAm 2108.56 -1.1 Brazil Bovespa 104899.78 -0.67 Mexico IPC 37080.64 -1.7 Chile IPSA 3952.68 -0.77 Argentina MerVal 48479.88 -0.828 Colombia COLCAP 1169.21 -0.49 Currencies Latest Daily % change Brazil real 5.1493 0.43 Mexico peso 22.0790 -0.53 Chile peso 759.3 -0.34 Colombia peso 3721.86 -0.46 Peru sol 3.5118 -0.40 Argentina peso 72.2500 -0.07 (interbank) (Reporting by Shreyashi Sanyal in Bengaluru; editing by Jonathan Oatis)

EMERGING MARKETS-Mexican peso tumbles on record GDP contraction

30 Jul 2020

* Mexico's GDP falls to record 17.3% in second quarter * Brazil hits record 69,000 daily coronavirus cases * Argentina may delay debt restructuring deadline amid impasse By Shreyashi Sanyal July 30 Mexico's peso was set for its worst day in two weeks on Thursday after data showed Latin America's second biggest economy contracted by double digits in the second quarter, while other currencies in the region slipped on surging coronavirus cases. The peso fell as much as 1.3% against the dollar after preliminary figures from the INEGI national statistics agency showed gross domestic product shrank 17.3% in the second quarter, the sharpest drop on record. With Mexico still struggling with its coronavirus outbreak, and the U.S. recovery seemingly losing steam, the rebound in Mexico's economy will be slow over the coming quarters, said Nikhil Sanghani, assistant economist at Capital Economics. Sanghani also said the data bolsters bets for the Mexican central bank to continue its easing cycle. "We expect a total of 100bp of further rate cuts this year, including a 50bp reduction at the central bank's next meeting in August," he said. Wall Street opened lower after data showed the U.S. economy contracted at its steepest pace since the Great Depression in the second quarter as the COVID-19 pandemic shattered consumer and business spending, and a nascent recovery is under threat from a resurgence in new cases of the coronavirus. Currencies in other parts of Latin America also weakened, with Brazil's real falling 0.3% as the country set daily records on Wednesday for new COVID-19 cases and deaths. The Colombian peso dropped as oil prices declined, and a Reuters poll showed Colombia's economy will have suffered the worst contraction in its history in the second quarter because of fallout from a coronavirus quarantine. Local investors are also awaiting a central bank policy decision on Friday, where the Colombian central bank, or Banrep, as it is also known, is expected to slash its benchmark interest rate by 25 basis points.d In Argentina, the government is considering pushing back a deadline for creditors to respond to its foreign debt restructuring proposal until mid- to late August, a source close to the negotiations told Reuters on Wednesday. The MSCI's Latin American stocks index fell 1.5%, with Brazil's Bovespa off 0.8% and Santiago shares off 1.4%. Brazilian telecoms firm TIM Participações SA fell 2.5% after reporting a 23.9% drop in second-quarter net income compared with the same period a year ago. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 1081.21 -0.5 MSCI LatAm 2099.92 -1.5 Brazil Bovespa 104769.89 -0.79 Mexico IPC 37609.17 -0.3 Chile IPSA 3927.57 -1.4 Argentina MerVal 0.00 0 Colombia COLCAP 1163.37 -0.98 Currencies Latest Daily % change Brazil real 5.1740 -0.25 Mexico peso 22.1638 -0.92 Chile peso 751.7 0.67 Colombia peso 3733.18 -0.77 Peru sol 3.4968 0.03 Argentina peso (interbank) 72.2500 -0.07 Argentina peso (parallel) 131 3.05 (Reporting by Shreyashi Sanyal in Bengaluru; editing by Jonathan Oatis)

EMERGING MARKETS-Currencies slide on virus woes, Russian rouble hits over 2-month low

30 Jul 2020

* Spikes in cases in Asia dispel notion of the worst being over

EMERGING MARKETS-Mexican peso, Brazilian real falter; Other Latam FX gain after Fed decision

30 Jul 2020

(Updates to close) By Shreyashi Sanyal and Susan Mathew July 29 Mexico's peso edged lower on Wednesday after a dour economic forecast, as did Brazil's real, while most other Latin American currencies firmed after the U.S. Federal Reserve pledged to keep interest rates low, denting the dollar. The Fed repeated its willingness to use the "full range of tools" to support the U.S. economy and keep interest rates near zero for as long as it takes to recover from the coronavirus outbreak, saying the economic path will depend significantly on the course of the virus. While this came as no surprise, it sent the dollar to two-year lows. "The most notable thing is the statement that the path of the economy will depend on COVID-19," said Nela Richardson, investment strategist at Edward Jones in St. Louis. "That sentence shows the primacy of COVID-19 in their outlook and the uncertainty of their outlook because of it." Fed Chair Jerome Powell said the health crisis had begun to weigh on economic recovery. Chile's peso scaled a near seven-month high, while crude exporter Colombia's currency rose 0.5% aided also by a rise in oil prices. Mexico's peso struggled for direction, last down 0.2%, after Gerardo Esquivel, one of the Bank of Mexico's five board members, said Mexico's gross domestic product could contract between 8.5% and 10.5% in 2020 due to impacts of the virus, expecting a year-on-year fall of 20% in the second quarter. The second quarter data is due on Thursday. Meanwhile, the bank extended the duration of a Fed swap line of up to $60 billion until at least March 31, 2021, from its current expiration date of September 30. Brazil's real erased gains to trade steady to lower. Figures signaled the central bank's emergency measures to boost the availability of credit were paying off with bank lending spreads in Brazil shrinking to their lowest in over six years and default ratios hitting a 2020 low in June. On the reform front, Brazil's Economy Minister Paulo Guedes said he is very optimistic on pushing through wide-ranging tax reform, with the next stage centering on income and payroll taxes. Stocks in the region were mixed with the Brazil Bovespa index rising 1.3% to hit its highest in nearly five months, while Mexican stocks fell 0.1%. Santander Brasil rose 3.7% as the lender said it may not need extra provisioning this year, after setting aside 3.2 billion reais ($621 million) for potential coronavirus-related loan losses. Latin American stock indexes and currencies 2002 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1086.51 0.41 MSCI LatAm 2125.01 0.96 Brazil Bovespa 105444.20 1.28 Mexico IPC 37727.88 -0.11 Chile IPSA 3983.37 -1.78 Argentina MerVal 48897.69 -0.075 Colombia COLCAP 1174.91 0.33 Currencies Latest Daily % change Brazil real 5.1729 -0.03 Mexico peso 21.9500 -0.11 Chile peso 757.4 0.95 Colombia peso 3704.6 0.49 Peru sol 3.4977 0.29 Argentina peso 72.1900 -0.07 (interbank) (Reporting by Shreyashi Sanyal in Bengaluru; Editing by Bernadette Baum and Grant McCool)

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