September 17, 2019 / 8:36 PM / a month ago

EMERGING MARKETS-Mexican peso, real up as Saudi output seen rebounding

 (Updates throughout)
    By Sruthi Shankar
    Sept 17 (Reuters) - Brazil's real turned positive and the
Mexican peso hit a session high on Tuesday after Saudi Arabia's
energy minister said the kingdom will restore its lost oil
output by the end of September after a weekend attack disrupted
5% of global output.
    In response, oil prices slumped about 7%, while main stock
markets in Brazil and Mexico rose sharply as the
latest news eased worries about a supply shock in oil markets
hurting global growth. 
    Oil prices surged 20% at one point on Monday, prompting
investors to flee riskier assets but helped stocks in Colombia,
whose top export is oil. The Colombia SE General index
was back down 0.3%, while the country's currency weakened
0.6% against the dollar.
    Saudi Energy Minister Prince Abdulaziz bin Salman said on
Tuesday the kingdom had managed to restore oil supplies to the
levels where they were prior to the weekend attacks by drawing
from oil inventories.
    The Brazilian real traded up 0.07% at 4.0765 per
dollar, while Mexico's peso strengthened by as much as
0.47% to trade at 19.3489 per dollar.
    However, currencies moved in tight ranges ahead of the U.S.
Federal Reserve's two-day policy meeting set to conclude on
Wednesday. The central bank is expected to cut interest rates
for the second time this year.
    Focus was also on Brazil's central bank meeting this week.
Officials are widely expected to cut record-low rates by 50
basis points in order to shore up Latin America's largest
economy.
    "Low inflation, subdued activity and continued fiscal
consolidation progress bode well for a 50bp policy rate cut this
week," Gustavo Rangel, chief economist, Latam at ING said in a
note.  
    "An additional 50bp cut that brings the SELIC rate
(overnight rate) to 5% in October is also likely, but we expect
a mid-cycle pause after that."
    Brazil's Bovepsa gained 0.7% as banking shares jumped.
Airlines such as Gol Linhas Aereas Inteligentes and
Azul SA, which took a hit on Monday on worries about
higher fuel costs, rose 5.8% and 3.5% respectively.
    The MSCI's index of Latin American stocks
jumped 0.7%.
    
    Latin American stock indexes and currencies at 2006 GMT:
    
        Stock indexes                  Latest       Daily %
                                                     change
 MSCI Emerging Markets                    1020.19       -0.67
 MSCI LatAm                               2726.90        0.65
 Brazil Bovespa                         104408.36         0.7
 Mexico IPC                              43447.93        1.42
 Chile IPSA                               5072.93        0.06
 Argentina MerVal                        30114.29      -1.463
 Colombia IGBC                           12978.77        -0.3
                                                             
           Currencies                  Latest       Daily %
                                                     change
 Brazil real                               4.0765        0.07
 Mexico peso                              19.3756        0.33
 Chile peso                                713.55       -0.60
 Colombia peso                             3382.1       -0.59
 Peru sol                                   3.338       -0.15
 Argentina peso (interbank)               56.4900       -0.37
                                                   
 
 (Reporting by Sruthi Shankar and Agamoni Ghosh in Bengaluru;
Editing by Dan Grebler)
  
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