June 25, 2019 / 3:17 PM / a month ago

CORRECTED-EMERGING MARKETS-Brazilian real falls on economy worries, dollar lifts other Latam forex

 (Corrects in paragraph 10 strategist affiliation to TD
Securities from TD Ameritrade)
    June 25 (Reuters) - The Brazilian real dipped on Tuesday on
worries about the country's economy and pension reform plans,
while other Latin American currencies rose against a weaker
dollar.
     The Brazilian real edged lower for a second day,
while the Mexican peso hovered near two-week lows even as
the greenback touch new lows against a basket of major
currencies.
    Minutes from the Brazilian central bank's June policy
meeting showed the economy is stagnating and uncertainty
surrounding economic and fiscal reforms is clouding the growth
and inflation outlook.
    Investors are looking ahead to a congressional committee
vote on the revised pension reforms bill, expected as soon as
Thursday.
    "BCB minutes emphasize that pension reform is the
prerequisite for any easing," Citi analyst Dirk Willer wrote in
a note.
    "Not only does the board see reforms as the key risk factor
in the balance of risks to inflation, reforms are also necessary
to drive down uncertainty and the structural rate."
    The dip in the dollar, however, helped the Colombian,
Chilean and Argentine pesos. 
    Emerging market currencies have benefited from a weaker
dollar that has been dented by the prospect of monetary policy
easing by the Federal Reserve.
    Federal Reserve Chairman Jerome Powell is expected on
Tuesday to maintain a more dovish posture after the U.S. central
bank last Wednesday signaled it could cut interest rates as
early as July to battle growing global and domestic economic
risks.
    "We do not expect a significant deviation from last week's
script but rather more context to how tied to the market's hip
Powell really is and whether a 50 basis point cut next month is
a possibility," Mazen Issa, senior FX strategist at TD
Securities.
    Financial markets across the globe were unnerved after the
United States imposed sanctions on Iran, heightening tensions
between the two nations, while prospects of a U.S.-China trade
deal have dimmed after a senior U.S. official said President
Donald Trump is "comfortable with any outcome" from the trade
talks.
    Brazil's main Bovespa stock index fell more than
half a percent, dragged down by a 3% loss for Smiles Fidelidade
SA after J.P. Morgan downgraded the mileage
subsidiary of airline Gol to neutral.
    The other big decliner was Brazilian stock exchange operator
B3 SA, which fell 3.8%. 

    Latin American stock indexes and currencies 1432 GMT
    
 Stock indexes                       daily %
                            Latest    change
 MSCI Emerging Markets      1047.23    -0.55
                                     
 MSCI LatAm                 2868.88    -0.29
                                     
 Brazil Bovespa           101487.92    -0.56
                                     
 Mexico IPC                43717.02    -0.06
                                     
 Chile IPSA              -           -
                                     
 Argentina MerVal          40163.89     0.13
                                     
 Colombia IGBC             12676.83    -0.14
                                     
                                            
 Currencies                          daily %
                                      change
                             Latest  
 Brazil real                 3.8260    -0.01
                                     
 Mexico peso                19.2025    -0.05
                                     
 Chile peso                   676.7     0.58
                                     
 Colombia peso               3183.4     0.25
                                     
 Peru sol                     3.294     0.21
                                     
 Argentina peso             42.3000     0.33
 (interbank)                         
                                     
 

 (Reporting by Sruthi Shankar in Bengaluru)
  
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