July 9, 2020 / 2:37 PM / a month ago

EMERGING MARKETS-Latam FX firm against steady dollar; stocks fall

    * Brazil's real up 1.7%; Chile peso at over 3-week high
    * Mexican inflation rise more than expected in June
    * Mexican cenbank to cut interest rates by another 100bps -
Citi
    * Prominent creditor group rejects Argentine govt's debt
deal
    * Brazil cenbank studying 'residual' cut in Selic rate 

    By Susan Mathew
    July 9 (Reuters) - Latin American currencies firmed against
a steady dollar on Thursday, with Chile's peso scaling an over
three week high, as investors focused on signs of economic
recovery even as cases of novel coronavirus infections surged.
    Regional stocks fell, tracking a choppy session on Wall
Street. Chile's stocks led, down 2.3%, while others
lost between 0.3% and 0.7%.
    Data from the United States pointed to a declining trend in
weekly jobless claims, while a continued rally in Chinese stocks
on recovery hopes set an upbeat tone for global markets and saw
the yuan fall below 7 to the dollar.
    But worries remained that surging coronavirus cases may lead
to tighter containment measure which could cause a deeper
recession. The global number of cases breached 12 million on
Wednesday, while Brazil surpassing 1.7 million confirmed cases
and 67,964 deaths.    
    Latam markets have rebounded sharply since March lows, but
surging cases, political issues, debt restructuring deal and
deteriorating economic fundamentals have weighed. 
    As copper prices soared to 14-month highs, exporter Chile's
peso rose 1.2%.
    Mexico's peso rose half a percent, firming for the
seventh session in eight. The country's consumer price inflation
accelerated more than expected in June, but stayed within the
central bank's target rate, official data showed. 
    "Given the significant output contraction... and inflation
hovering around the mid-point of the central bank's target, we
think Banxico will further cut (interest rates by) 100 basis
points to a terminal rate of 4.0%," said Citigroup strategists
in a note.
    They expect a 50 basis points in August, followed by two
more 25 basis points cuts in September and November.
    Brazil's real jumped 1.7% to 5.2552 to the dollar.
    Brazil's central bank is studying recent data showing
inflation is somewhat above expectations to see if there is room
for a "residual" cut in interest rates, its president Roberto
Campos Neto told Reuters in an interview late on Wednesday.

    Campos Neto said he expected the bank's growth projections
to improve as pandemic emergency economic aid measures continued
to spur improved growth.
    Argentine markets were closed for a local holiday. The most
prominent group of funds had dismissed the government's "final"
debt offer as only a good starting point on Wednesday, but
analysts still believe a deal to restructure its $65 billion
sovereign debt can be struck.
    
    Key Latin American stock indexes and currencies at 1411 GMT:
  Stock indexes           Latest   Daily %
                                   change
 MSCI Emerging Markets    1082.02     1.11
                                   
 MSCI LatAm               1998.89     1.13
                                   
 Brazil Bovespa          99461.54    -0.31
                                   
 Mexico IPC              37264.81    -0.58
                                   
 Chile IPSA               4087.52    -2.35
                                   
 Colombia COLCAP          1145.65    -0.68
                                   
                                          
      Currencies          Latest   Daily %
                                   change
 Brazil real               5.2552     1.71
                                   
 Mexico peso              22.5500     0.47
                                   
 Chile peso                 776.2     1.31
                                   
 Colombia peso            3625.95     0.17
                                   
 Peru sol                  3.5208    -0.03
                                   
 
 (Reporting by Susan Mathew in Bengaluru;
Editing by Marguerita Choy)
  
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