March 12, 2019 / 9:28 PM / 7 months ago

EMERGING MARKETS-Latam FX ride high on dollar's weakness, stocks dip

 (Recasts, updates prices throughout)
    By Susan Mathew
    March 12 (Reuters) - Latin American currencies strengthened
on Tuesday as the dollar softened on tame U.S. inflation data
that increased the likelihood the Federal Reserve will stand pat
on interest rates.
    Brazil's real firmed 0.8 percent, while higher oil
prices bolstered gains in currencies of crude-exporting
countries Colombia and Mexico.
    U.S. consumer price data showed that inflation remains low
despite a tight labor market, making a stronger case for the
Fed's dovish stance.
    "Currency markets have drawn their attention to the
disappointment in the core (inflation) reading," analysts at TD
Securities said  in a note. "While this will not be viewed as a
game changer for FX ... it emphasizes the benign nature of
central banking currently, and by extension, suppressed volumes
which bodes well for carry strategies." 
    Mexico's peso rose 0.3 percent, gaining for a third straight
session, while the Colombian peso surged 1 percent, breaking a
five-session losing run.
    Chile's currency surged, following prices of copper,
the country's main export, higher. The Argentine peso,
however, fell 0.4 percent amid dollar hedging by private
    Regional stocks fell despite a rally in world stocks, hurt
mostly by domestic factors. 
    Mexico's IPC stock index resumed its losing run as
investors were rattled by contradictory comments by the
country's president and deputy finance minister regarding a
flagship refinery project.
    President Andres Manuel Lopez Obrador on Tuesday denied any
delay to the Dos Bocas refinery project after the deputy finance
minister was quoted as saying that the planned $2.5 billion for
its construction would be moved to state oil firm Pemex for
"exploration and production."
    "Contradictions within the federal government do not help
financial markets," said James Salazar, an economist at CI
Banco. On Monday, the stock index broke a 10-session losing
streak and closed up 0.7 percent, only to resume logging losses
on Tuesday. 
    Brazil's benchmark Bovespa stock index closed down
0.2 percent after three consecutive sessions of gains. Analysts
attributed the losses to profit taking.
    Investor focus remains on the progress of Brazil's pension
reform proposal through Congress.
    Rogerio Marinho, secretary of social security and labor at
Brazil's Economy Ministry, told Reuters on Tuesday that the
government is sticking to its goal of having its pension reform
bill, with more than 1 trillion reais ($262.25 billion) in
public savings, ready for a vote in the lower house of Congress
by May end.
 Key Latin American stock indexes and currencies at 2108 GMT:
      Stock indexes          Latest        Daily pct
 MSCI Emerging Markets        1,051.52                1
 MSCI LatAm                   2,813.59              0.6
 Brazil Bovespa              97,828.03             -0.2
 Mexico IPC                  41,740.62            -0.32
 Chile IPSA                   5,289.44            -0.19
 Argentina MerVal            33,681.28            -0.32
 Colombia IGBC               12,597.22             0.82
        Currencies           Latest        Daily pct
 Brazil real                    3.8111             0.78
 Mexico peso                   19.3492              0.3
 Chile peso                      665.9             0.62
 Colombia peso                   3,147             0.99
 Peru sol                        3.297             0.30
 Argentina peso                41.5000            -0.55

($1 = 3.8131 reais)

 (Reporting by Susan Mathew; Additional reporting by Miguel
Angel Gutiérrez in Mexico City and Paula Arend Laier in Sao
Paulo; Editing by Leslie Adler)
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