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Forex, News

Latam currencies gain ahead of Fed, Brazil rate decisions

July 31 (Reuters) – Latin American currencies rose on Wednesday as investors awaited an interest rate cut from the U.S. and Brazilian central banks, while stocks fell as the latest round of U.S.-China trade talks concluded without any major breakthrough. The U.S. Federal Reserve will conclude its two-day policy meeting later in the day, and is widely expected to lower interest rates by 25 basis points. If implemented, it would be the central bank’s first rate cut in a decade. MSCI’s index for Latin American currencies outperformed the broader emerging markets index as the real moved 0.6% higher ahead of a key central bank decision in Brazil. Economists polled by Reuters expect the Banco Central to cut its benchmark interest rate to a record low on Wednesday to revive a sagging economy and bring inflation back up toward target. Brazil, Latin America’s largest economy, is struggling to emerge from a crippling recession, with the government focused on passing through Congress a pension overhaul it hopes will prop up public finances and kick-start growth. Stocks in Sao Paulo were marginally lower while those in Mexico city shed 0.6% after data showed the economy narrowly avoided slipping into recession during the first half of 2019. Mexican President Andres Manuel Lopez Obrador reiterated that the country’s economy was doing well, saying that latest data was “good news”. He also added that next year’s budget, will not include new taxes or fuel price increases, pushing the peso 0.3% higher. Colombia’s peso rose 0.3%, while the IGBC index moved a touch higher. Colombia will need to raise nearly 8 trillion pesos ($2.4 billion) to finance the government’s proposed 2020 budget, Finance Minister Alberto Carrasquilla said on Tuesday. Latin America’s fourth-largest economy has a fiscal deficit goal of 2.1% of gross domestic product for 2020, considered key to maintaining its current credit ratings. Key Latin American stock indexes and currencies at 1410 GMT Stock indexes daily % Latest change MSCI Emerging Markets 1037.87 -0.51 MSCI LatAm 2848.35 -0.23 Brazil Bovespa 102193.21 -0.72 Mexico IPC 40912.82 -0.6 Chile IPSA 4996.54 -0.09 Argentina MerVal 42485.67 0.053 Colombia IGBC 12766.91 0.21 Currencies daily % Latest change Brazil real 3.7704 0.63 Mexico peso 18.9992 0.34 Chile peso 700.3 -0.24 Colombia peso 3294.73 0.14 Peru sol 3.297 0.00 Argentina peso 43.8100 0.37 (interbank) (Reporting by Agamoni Ghosh in Bengaluru Editing by Nick Zieminski)


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