September 2, 2019 / 7:53 PM / 17 days ago

EMERGING MARKETS-Argentine peso steadies on capital controls, broader Latam hit by trade woes

 (Updates with closing price)
    By Sruthi Shankar
    Sept 2 (Reuters) - The Argentine peso steadied and the
Merval stock index jumped on Monday as the country
imposed capital controls to stem losses in the currency,
outperforming its Latin American peers held back by worries over
new U.S.-China tariffs.
    The peso closed up 0.88% at 59 per dollar in
official trading after the government authorized currency
controls on Sunday, an about-face by President Mauricio Macri,
who had previously lifted many protectionist practices of his
predecessor, Cristina Fernandez de Kirchner.
    The peso fell about 0.79% in black market trading,
underscoring a loss of trust in the official price, while
Argentine dollar bonds and euro-denominated bonds slumped to new
lows. However, its benchmark stocks index rose more than 6% to
record its biggest percentage gain in nearly three weeks.
    The central bank is now authorized to restrict purchases of
dollars as it burns through reserves to prop up the peso, which
fell nearly 5% in the opening hours of trading, but staged a
turnaround.
    The controls followed the peso's drop in August to its worst
month on record after Standard & Poor's, Fitch and Moody's
downgraded Argentina's debt, citing growing risks of a default
after the government announced plans to "re-profile" some $100
billion in debt.
    "On ARS, it appears that authorities will keep it stable
now. Capital controls are not necessarily FX negative, but
liquidity disappears," Citi's Dirk Willer wrote in a client
note.
    "Clearly local markets have become uninvestable again. Index
providers are also likely to take note."
    The peso has been battered since Macri suffered a thumping
defeat in primaries at the hands of Alberto Fernandez, on fears
that the return of a leftist government could herald a new era
of interventionist policies.
    MSCI's index of Latin American stocks shed
over 1% with stocks in Mexico leading losses after a
survey showed activity in the country's manufacturing sector
shrank for a third consecutive month in August. 
    Brazilian shares edged lower and the real
dropped 0.8% despite upbeat factory activity numbers and a
slightly higher-than-expected trade surplus in August.

    The sentiment was fragile as the United States began
imposing 15% tariffs on a variety of Chinese goods on Sunday and
China retaliated by setting duties on U.S. crude oil.

    With U.S. markets closed for holiday, trading volumes were
thin across the board.
    
Key Latin American stock indexes and currencies at 1914 GMT:
    
   Stock indexes           Latest    Daily %
                                     change
 MSCI Emerging Markets       981.93    -0.24
                                     
 MSCI LatAm                 2563.32    -1.44
                                     
 Brazil Bovespa           100819.97    -0.31
                                     
 Mexico IPC                42175.33    -1.05
                                     
 Chile IPSA                 4769.72    -0.72
                                     
 Argentina MerVal          26103.55    6.075
                                     
 Colombia IGBC             12625.96     -0.1
                                     
                                            
      Currencies           Latest    Daily %
                                     change
 Brazil real                 4.1795    -0.91
                                     
 Mexico peso                20.1483    -0.45
                                     
 Chile peso                   724.8    -0.46
                                     
 Colombia peso              3437.65     0.06
                                     
 Peru sol                     3.405    -0.53
                                     
 Argentina peso             57.5000     3.51
 (interbank)                         
                                     
    

 (Reporting by Sruthi Shankar and Agamoni Ghosh in Bengaluru;
Editing by Richard Chang)
  
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below