Brazil’s real steadies after recent declines, eyes on Fed minutes

Brazil’s real steadies after recent declines, eyes on Fed minutes

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Brazil’s real steadied on Wednesday

after taking losses due to concerns about its fiscal health

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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

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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

administration.

“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

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against a broadly weakening dollar. The Colombian peso

slipped, hit by sliding prices of oil, the country’s main

export.

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.

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Elsewhere, Poland’s zloty held gains after the

central bank left its main interest rate unchanged as expected

at 6.75%.

Key Latin American stock indexes and currencies:

Latest Daily %

change

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 %

change

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)

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