August 27, 2019 / 3:31 PM / 5 months ago

EMERGING MARKETS-Latam FX subdued as trade uncertainty persists; stocks gain

    By Sruthi Shankar
    Aug 27 (Reuters) - Most Latin American currencies moved
little against the dollar on Tuesday as investors remained on
edge after a recent escalation in the U.S.-China trade dispute,
although an index of the region's stocks snapped a three-day run
of losses. 
    Brazil's real currency - which, bar Argentina's peso
, has lagged its Latin American peers with a near 8% loss
this month - steadied at 4.15 per dollar. 
    Brazil's central bank president, Roberto Campos Neto, said
the economy was stable or expanded slightly in the second
quarter, but said the pace of growth should pick up, albeit
    The country is also facing pressure from world leaders
because of an environmental crisis due to a record number of
fires in the Amazon rainforest. After European leaders
threatened to tear up a trade deal with South America last week,
Brazil's Foreign Trade Secretary Marcos Troyjo said the
EU-Mercosur trade pact was still under review.
    Other currencies in the region were more subdued, with the
Mexican peso, the Colombian peso and the Chilean
peso falling between 0.16% and 0.6% as investors assessed
conflicting comments from U.S. and Chinese officials over the
drawn-out trade dispute.
    "Should our view of further escalation and slower global
growth play out, there would be more pain in the risk market. In
EMFX, we remain defensive," Morgan Stanley analysts wrote in a
    U.S. President Donald Trump sought to ease tensions by
predicting another round of talks with Beijing on Monday,
although China's foreign ministry said it had not received any
recent phone call from the United States on trade.
    Stock markets were a bright spot, with the MSCI's index of
Latin American equities gaining about 1% as Sao
Paulo-listed shares tacked on 1.4%. 
    Mexico's main stock index also jumped more than 1%
after the government said it would save $4.5 billion from a deal
struck with a group of companies over a dispute surrounding
contracts for gas pipelines issued under the previous
    Argentina's peso dropped 0.5% to trade at 55.58 per
dollar. Traders said the central bank sold two rounds of $50
million from its own reserves at a rate of 55.44 pesos per
dollar and 55.4729 pesos per dollar, respectively.
    The central bank is selling reserves to intervene in the
foreign exchange market and defend the beleaguered peso after
opposition candidate Alberto Fernandez netted a significant lead
over incumbent Mauricio Macri in the Aug. 11 primary vote.

    Latin American stock indexes and currencies at 2010 GMT:
   Stock indexes           Latest    Daily %
 MSCI Emerging Markets       965.87     0.53
 MSCI LatAm                 2499.25     0.94
 Brazil Bovespa            97758.27     1.38
 Mexico IPC                40444.79     0.91
 Chile IPSA                 4647.43     0.67
 Argentina MerVal          25545.94     -1.1
 Colombia IGBC             12397.48      0.6
      Currencies           Latest    Daily %
 Brazil real                 4.1582    -0.05
 Mexico peso                19.9739    -0.27
 Chile peso                  720.45    -0.16
 Colombia peso              3451.35    -0.59
 Peru sol                    3.3828    -0.02
 Argentina peso             55.5800    -0.49

 (Reporting by Sruthi Shankar in Bengaluru; editing by Jonathan
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