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China relief helps Latam FX rise, Brazil’s pension reforms eyed

Aug 8 (Reuters) – Latin American currencies broadly firmed against the dollar on Thursday, as surprisingly upbeat trade data from China and hints that Beijing officials will limit losses in the yuan eased growth worries for now. After reeling from worries in the past week about an escalating U.S.-China trade war denting global growth, emerging markets and other risk assets breathed a sigh of relief after trade data showed July exports grew more than expected in China amid U.S. tariff pressure. Signs that the People’s Bank of China was stepping in to stabilize the yuan also helped bring some poise to the markets. “The PBOC set the dollar’s reference rate above CNY 7.0, but not as high as anticipated, and this has seen the yuan strengthen modestly today,” said Marc Chandler, chief market strategist at Bannockburn Global Forex. Brazil’s real rose about 0.5%, indicating optimism after the lower house of Congress on Wednesday approved a far-reaching pension overhaul bill, which now has to be passed by the Senate. The bill raises the minimum retirement age and reduces some workers’ benefits, lowering the cost of a generous social security system that has become unsustainable and was fueling Brazil’s rising public debt. Sao Paulo-listed shares gained 0.7%, boosted by miner Vale and state-owned oil company Petrobras , which sold its entire oil hedge position amid a sharp fall in crude prices. The biggest gainer was Brazil’s No. 3 airline, Azul SA , up 3% after it beat profit expectations in the second quarter. State-controlled Banco do Brasil SA gained more than 1.5% after posting a surge in second-quarter recurring net income, helped by lower operating expenses and higher fee income. The Mexican peso also edged higher after data showed consumer prices rose 3.78% in the year through July, with the pace of increases slowing for a third straight month and raising the chances of interest rate cuts. A Reuters poll showed Mexico’s peso is weakening due to increasing global trade tensions and is expected to trade at 19.66 per dollar in one year, 0.4% weaker than July’s survey. The Colombian peso posted the biggest gains among the region’s currencies as prices of oil, the country’s top export, rose on expectations of more production cuts. Latin American stock indexes and currencies at 1330 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 981.41 0.9 MSCI LatAm 2741.45 0.96 Brazil Bovespa 103438.94 0.64 Mexico IPC 0.00 – Chile IPSA 4811.07 – Argentina MerVal 0.00 – Colombia IGBC 12328.00 – Currencies Latest Daily % change Brazil real 3.9491 0.64 Mexico peso 19.5856 0.18 Chile peso 712.6 0.20 Colombia peso 3403.05 1.25 Peru sol 3.388 – Argentina peso 45.4500 0.31 (interbank) (Reporting by Sruthi Shankar in Bengaluru; editing by Jonathan Oatis)

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