August 28, 2019 / 7:58 PM / a year ago

EMERGING MARKETS-Latam currencies weaken over growth worries, stocks rise

 (Updates prices, adds quote)
    * Banxico reduces 2019 growth target for Mexico 
    * ARS slumps despite central bank intervention 
    * Jump in oil prices lifts stocks in Latam 

    By Agamoni Ghosh
    Aug 28 (Reuters) - Latin American currencies weakened
against a firm dollar on Wednesday as investors shied away from
riskier bets amid global growth worries, while strong demand for
oil helped equities in the region rise. 
    Adding to a bout of data signaling global slowdown, Mexico's
central bank, Banxico, reduced its projected growth for Latin
America's second-largest economy for the fifth time in a row for
2019 and expects a smaller expansion in 2020.
    Banxico also cut its inflation forecast for the end of 2019
to 3.2% from 3.7% on the back of growth risks arising from
global trade disputes and struggling state oil firm Pemex, whose
ratings downgrade poses a big threat to the sovereign debt.
    The Mexican peso shed 0.4%.
    The Argentine peso closed 3% lower, but managed to
pare some earlier losses as the central bank sold $262 million
of its reserves in five interventions aimed at controlling the
currency's fall. 
    Worries about Argentina's ability to meet its
dollar-denominated debt obligations have increased since the
peso got trounced by political uncertainty after an Aug. 11
primary election.
    The real hovered near 2019 lows. Central bank
president Roberto Campos Neto said on Wednesday that inflation
in Brazil, a country that once suffered from hyperinflation, is
on a downward path. 
    The central bank waded into the foreign exchange market on
Tuesday in a rare sale of dollars after the real slumped to its
weakest level against the greenback in almost a year and within
sight of its all-time low.
    The real has lost about 8% of its value against the dollar
in August, under pressure from worries surrounding global trade
and economic growth, with mounting expectations for the central
bank to further cut interest rates.
    "The weakness of the economy makes a 50 bp cut in Selic rate
at the next central bank meeting in September increasingly
likely," said analysts from Capital Economics in a note. 
    A jump in oil prices supported most stock markets, with
Brazil's Bovespa and Colombian equities gaining
between 06% and 0.8%. 

 Key Latin American stock indexes and currencies at 1930 GMT  
 Stock indexes                                   daily %
                          Latest                  change
 MSCI Emerging Markets              965.33          0.08
 MSCI LatAm                        2505.73          0.77
 Brazil Bovespa                   98081.48          0.83
 Mexico IPC                       40989.16          0.84
 Chile IPSA                        4600.19          -0.1
 Argentina MerVal                 25356.48         2.981
 Colombia IGBC                    12467.15           0.6
 Currencies                                      daily %
                                    Latest        change
 Brazil real                        4.1563         -0.53
 Mexico peso                       20.0775         -0.40
 Chile peso                          722.3          0.03
 Colombia peso                     3473.05         -0.17
 Peru sol                            3.401         -0.24
 Argentina peso                    57.8000         -3.10

 (Reporting by Agamoni Ghosh in Bengaluru
Editing by Chris Reese)
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