Brazil’s real steadied on Wednesday
after taking losses due to concerns about its fiscal health
under new President Luiz Inacio Lula da Silva, while other Latin
American currencies were mixed ahead of the release of U.S.
Federal Reserve meeting minutes.
The real firmed 0.2% to 5.44 per dollar after
touching an over one-month low of 5.47 in the previous session.
Investors have been rattled by Lula’s giant social spending
package and a budget-busting extension to a fuel tax exemption
announced earlier this week.
Adding to the uncertainty, the incoming social security
minister said on Tuesday the government would need to review the
investor friendly pension reform approved by Bolsonaro’s
“Markets are increasingly nervous that Lula will push
populist policies that will require more spending and
borrowing,” said Win Thin, global head of currency strategy at
Brown Brothers Harriman.
Brazil’s main Bovespa stock index rose 0.4% after
shedding over 5% in the past two sessions.
State-run oil company Petrobras was little
changed after it said its board of directors had approved the
early departure of chief executive officer Caio Paes de Andrade.
The Mexican peso and Chilean peso firmed
against a broadly weakening dollar. The Colombian peso
slipped, hit by sliding prices of oil, the country’s main
Traders will scour the Fed’s December meeting minutes to be
released at 2:00 p.m. ET for indications that policymakers are
concerned about persistent inflation even as the U.S. central
bank slows the pace of its rate increases.
Elsewhere, Poland’s zloty held gains after the
central bank left its main interest rate unchanged as expected
Key Latin American stock indexes and currencies:
Latest Daily %
MSCI Emerging Markets 973.93 1.18
MSCI LatAm 2052.86 0.43
Brazil Bovespa 104517.61 0.34
Mexico IPC 49565.83 1.05
Chile IPSA 5085.69 -1.02
Argentina MerVal 198801.17 0.222
Colombia COLCAP 1287.62 1.42
Currencies Latest Daily %
Brazil real 5.4431 0.18
Mexico peso 19.3453 0.28
Chile peso 855.5 0.78
Colombia peso 4937.09 -0.91
Peru sol 3.8247 -0.45
Argentina peso (interbank) 178.6400 -0.14
(Reporting by Sruthi Shankar in Bengaluru
Editing by Mark Heinrich)