Latam currencies edge higher against dollar; South African rand surges

Latam currencies edge higher against dollar; South African rand surges

19 Dec    Finance News, PMN Business, REU

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Latin American currencies inched

higher on Monday, with the Peruvian sol leading gains against a

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weaker dollar, while South Africa’s rand rallied on President

Cyril Ramaphosa’s re-election as leader of the ruling African

National Congress (ANC).

The sol rose 0.4% after Peruvian President Dina

Boluarte, who is leading a transitional government following the

ouster of her predecessor, said she will replace the prime

minister as part of a reshuffling of her Cabinet.

“The move is Boluarte’s attempt to seek support in order to

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approve early elections amid ongoing protests,” Citi strategists

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wrote in a client note.

“She declared the reshuffling aims to build a ‘political

team’ to facilitate dialog in the country, and said the new

elections cannot be held without new political reforms.”

Both the Mexican peso and the Colombian peso

added 0.1% each, while Brazil’s real struggled for

direction.

The dollar retreated from a rally supported by

hawkish tones from major central banks last week.

In Brazil, investors are still awaiting a decision by the

country’s lower house to increase the spending cap by 145

billion reais ($27.8 billion) for each year to cover payments of

600 reais a month under the Bolsa Familia welfare program. It

was approved by the Senate in early December.

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Still, gains in most Latin American currencies were limited

after China officially reported its first coronavirus-related

deaths since unwinding some of its strictest pandemic control

measures earlier this month.

Chile’s peso dipped 0.3% as concerns about China’s

efforts to exit from its zero-COVID strategies outweighed a rise

in prices of copper, the South American country’s main export.

Latin American economies, which rely heavily on China as a

trading partner, have been bogged down by worries that Beijing’s

rapid easing of COVID-19 control measures could lead to more

infections and further disruptions to demand.

The MSCI’s index for Latam stocks has still

fared better for the year, falling about 4% compared to a much

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steeper 22.3% slide in the broader emerging markets equities

index.

Among other emerging market currencies, South Africa’s rand

jumped 2.2% as investors cheered Ramaphosa’s re-election,

as he beat out Zweli Mkhize, a former health minister, in the

race.

The Russian rouble slumped past 68 per dollar

to more than a seven-month low, hurt by low oil prices and fears

that sanctions on Russian oil could crimp the country’s export

revenue.

Key Latin American stock indexes and currencies at 1438 GMT:

Stock indexes Latest Daily %

change

MSCI Emerging Markets 957.30 0

MSCI LatAm 2051.79 0.12

Brazil Bovespa 103308.26 0.44

Mexico IPC 0.00 0

Chile IPSA 5167.86 0.13

Argentina MerVal 166378.27 0.768

Colombia COLCAP 1214.93 0.28

Currencies Latest Daily %

change

Brazil real 5.3240 -0.61

Mexico peso 19.8252 -0.28

Chile peso 888.1 0.09

Colombia peso 4780.24 0.11

Peru sol 3.8247 0.05

Argentina peso (interbank) 173.6200 -0.53

Argentina peso (parallel) 319 0.63

(Reporting by Shreyashi Sanyal in Bengaluru; Editing by Paul

Simao)

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