July 20, 2018 / 3:26 PM / 5 months ago

EMERGING MARKETS-LatAm currencies climb on Trump comments; Brazil outperforms

    By Bruno Federowski
    BRASILIA, July 20 (Reuters) - Latin American currencies
strengthened on Friday after U.S. President Donald Trump spoke
out against a strong dollar, spurring investors worldwide to
lock in profits on the greenback.
    In a CNBC interview on Thursday, Trump criticized the
Federal Reserve's policy on raising interest rates, saying it
eroded the United States' competitive edge, as did a strong
dollar.
    His remarks drove profit-taking on the dollar across
financial markets, sending emerging-market currencies up. Risky
assets like emerging market currencies have taken a beating in
recent weeks amid escalating trade tensions between the United
States and China.
    The Mexican peso firmed 0.2 percent, while the
Chilean peso rose 0.8 percent.
    Brazilian markets outperformed, with the real up 1.6
percent, on reports that several parties were leaning towards
supporting center-right presidential candidate Geraldo Alckmin
in October's presidential elections.
    If confirmed, that would give him additional time to
advertise on television during the presidential campaign. The
vote is poised to be the most hard-to-predict in decades.
    "Their support does not mean Alckmin will win, nor does it
immediately affect his performance, but it brightens the outlook
for investors and markets," said Alessandro Faganello, a trader
at Advanced brokerage in São Paulo.
    Alckmin is seen by investors as likely to stick to an agenda
of privatizations, deregulation and austerity which they
consider critical to bringing back Brazil's investment grade
rating.
    The benchmark Bovespa stock index rose 2.3 percent,
leading the advance in equity markets in the region. 
    Shares of Gol Linhas Aéreas SA were the biggest
gainers. A stronger local currency could reduce
dollar-denominated costs for the airline.
    
    Key Latin American stock indexes and currencies at 1450 GMT:
 Stock indexes                                 daily %   YTD %
                                      Latest    change  change
 MSCI Emerging Markets                1072.71     1.14   -8.44
 MSCI LatAm                           2659.23     2.94   -8.66
 Brazil Bovespa                      79303.81     2.34    3.80
 Mexico IPC                          48909.67     0.33   -0.90
 Chile IPSA                           5408.00     0.69   -2.81
 Chile IGPA                          27235.86     0.56   -2.66
 Argentina MerVal                    27279.05     1.73   -9.27
 Colombia IGBC                       12222.10     -0.4    7.49
                                                              
 Currencies                                    daily %   YTD %
                                                change  change
                                       Latest           
 Brazil real                           3.7839     1.59  -12.44
 Mexico peso                          19.0365     0.15    3.48
 Chile peso                             657.9     0.82   -6.57
 Colombia peso                        2879.89     0.07    3.55
 Peru sol                               3.273     0.03   -1.10
 Argentina peso (interbank)           27.6700     0.40  -32.78
                                                        
 Argentina peso (parallel)               28.6     0.17  -32.76
                                                        
 

 (Reporting by Bruno Federowski
Additional reporting by Claudia Violante in São Paulo; Editing
by Bernadette Baum)
  
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