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Brazil’s real weakens after minister’s comments, Chilean peso up

* Brazil minister says weak FX, interest rates “new normal” * Chilean peso bounces on high copper prices * Trading volumes low on account of U.S. holiday (Updates prices, adds details) By Ambar Warrick Jan 20 (Reuters) – Brazil’s real weakened on Monday after the country’s economic minister flagged weakness in the currency as the “new normal,” while the Chilean peso firmed on the back of strong copper prices. Brazilian Economy Minister Paulo Guedes said in an interview that the country’s economy had entered a new phase of low interest rates and a weak currency, a reversal of the prevailing set of circumstances for much of the previous several years. The comments come amid slow economic growth and record-low interest rates in Latin America’s largest economy, which have weighed heavily on the real and made it less attractive as a “carry trade” currency. The real weakened about 0.6% to the dollar, with analysts also suggesting the country would miss out on the broader risk-on sentiment bought about by the signing of an interim Sino-U.S. trade deal last week. “The Brazilian real is the worst performer with its small trade exposure to China limiting support from the signing of the U.S./China Phase 1 trade deal,” said Jane Foley, senior FX strategist at Rabobank. Chile, the world’s top producer of copper, saw its peso firm about 0.5% to the dollar after data on Friday showed a surprise jump in Chinese industrial output, pointing to recovering demand in the metals importer, which pushed copper prices to eight-month highs. The peso was stronger for a second straight day. Broader Latin American currencies were largely subdued against a stronger dollar, although a holiday in the United States also prompted reduced trading volumes. Markets will now focus on a string of central bank meetings later in the week, as well as the World Economic Forum in Davos, Switzerland. Latin American equities were a touch lower, having marked strong gains on Friday amid optimism over the U.S.-China trade deal. Brazil’s main stock index fell 0.1% with shares of B3 SA, the operator of the Sao Paulo stock exchange, down 1%. Mexican stocks were largely unchanged, while Argentine stocks rose to a near one-month high. Key Latin American stock indexes and currencies at 1900 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1144.91 -0.17 MSCI LatAm 2918.59 -0.21 Brazil Bovespa 118332.21 -0.12 Mexico IPC 45842.59 0.05 Chile IPSA 4814.37 -1.37 Argentina MerVal 43131.92 1.871 Colombia COLCAP 1651.40 -0.28 Currencies Latest Daily % change Brazil real 4.1895 -0.61 Mexico peso 18.6680 -0.07 Chile peso 769.4 0.40 Colombia peso 3330 0.02 Peru sol 3.316 0.15 Argentina peso 59.9500 0.10 (interbank) (Reporting by Ambar Warrick and Shreyashi Sanyal in Bengaluru; editing by Nick Macfie and Tom Brown)

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