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EMERGING MARKETS-Most Latam FX fall, Brazil's real firms

Susan Mathew

(Updates prices) June 27 (Reuters) - Most Latin American currencies dipped on Thursday as news flow from the White House dampened optimism around a China-U.S. trade deal, while Brazil's real reversed course to trade higher. Currencies of Colombia, Chile and Argentina fell between 0.07% and 0.3% against a dollar that held steady as traders moved to the sidelines ahead of this weekend's G20 summit when leaders of China and United States are to meet to discuss trade. U.S. President Donald Trump's decision on whether to impose a new round of tariffs on Chinese goods is contingent on the outcome of his meeting with Chinese President Xi Jinping, a senior Trump administration official said on Thursday.

He added it was unlikely that the United States would agree to lift sanctions imposed on Chinese telecom equipment maker Huawei Technologies Co Ltd Mexico's peso was 0.2% lower. The Bank of Mexico kept rates unchanged on Thursday, as expected, and said the balance of risks for growth has become more uncertain. Christian Lawrence, a senior market strategist at Rabobank, said that while there has been a gradual rise in dovish-ness over the last three meetings, this meeting's message has been the most dovish so far. "I would say that the door is now open for rate cuts," he said. "I personally don't think they are going to cut rates until the fourth quarter, but that will be dependent on the Fed decision in July. If the Fed says it's going to start an easing cycle immediately then Banxico may end up cutting rates sooner." The peso steepened losses slightly right after the central bank announcement, but moved back to levels before the rate decision. It later deepened losses as the session progressed. Mexican stocks slid 1.1% with shares of energy infrastructure firm IEnova declining the most, down 6.2%, on pipeline contract concerns. Brazil's real rose 0.5%, recovering from a week's low hit earlier in the session, on reassurances on economic growth and pension reforms. Brazil's economy should recover in the second quarter of this year, central bank president Roberto Campos Neto said, but he said it was contingent on the approval of pension reforms.

The bank had slashed its 2019 economic growth forecast earlier in the day. On the pension reform front, special congressional pension coordinator Samuel Moreira said there is still time to vote on the reform this month, even after a committee meeting to decide on a final version of the bill before sending it to the lower house plenary was canceled on Thursday. Sao Paulo traded stocks cut losses to trade flat. Shares in Colombia rose 0.2%, while those in Argentina jumped 3% to hover near all-time highs.

Key Latin American stock indexes and currencies at 1940 GMT:

Stock indexes Latest Daily %


MSCI Emerging Markets 1,055.61 0.73MSCI LatAm 2,839.60 -0.13Brazil Bovespa 100,492.47 -0.19Mexico IPC 43,305.14 -1.11Chile IPSA 5,053.20 -0.6Argentina MerVal 41,122.23 3.02Colombia IGBC 12,630.22 0.2Currencies Latest Daily %


Brazil real 3.8277 0.49Mexico peso 19.1618 -0.18Chile peso 679.4 -0.07Colombia peso 3,196.15 -0.47Peru sol 3.289 0.12Argentina peso 42.6800 0.12


(Reporting by Susan Mathew in Bengaluru; editing by Grant McCool)