Bonds News

EMERGING MARKETS-Latam FX eases against stronger dollar, Brazil real hits one-month low

    * Chile's peso comes off highest level since mid-2019
    * Brazilian real touches lowest since late Nov. 2020
    * Mexican Dec inflation below expectations, rate cut

 (Updates prices throughout)
    By Ambar Warrick and Shreyashi Sanyal
    Jan 7 (Reuters) - Mexican and Chilean pesos eased from
recent peaks on Thursday, while the Brazilian real fell to its
lowest in over one month against the dollar as civil unrest in
the United States prompted a measure of profit taking and
safe-haven buying.
    Chile's peso, the top performing Latin American
currency in 2020, tumbled 2% from an over-17-month high, while
Mexico's peso dipped 1.7% from a 10-month peak.
    Brazilian real weakened 1.6% against the
dollar, with investors also dissatisfied with the pace of the
government's reform agenda. 
    Brazilian Health Minister Eduardo Pazuello said on Wednesday
that the government is fully prepared to start its vaccination
plan against COVID-19 this month, although it has not yet
approved for use either of the vaccines that it has stockpiled.
    The dollar bounced off 2018 lows after hundreds of
supporters of President Donald Trump stormed the U.S. Capitol on
Wednesday in a bid to overturn his election defeat.
    This came on the heels of Democrats taking control of the
U.S. Senate, clearing the way for Joe Biden to carry out his
reform agenda once he takes office as president on Jan. 20.
    Emerging market risk assets had rallied on the prospect of
higher fiscal spending and corporate taxes in the United States,
which weighed on the dollar and U.S. stocks by pushing capital
flows out.
    The prospect of an economic recovery this year also pointed
to strong capital flows into emerging markets in the near-term.
    In Mexico, investors were anticipating the minutes of the
central bank's most recent meeting, where it decided to leave
lending rates unchanged on a surprise dip in inflation and peso
stability. But the decision was reached with a narrow majority
in the bank's board.   
    With December inflation coming in slightly below
expectations, analysts forecast an interest rate cut next month.

    "Board members voting for no change likely underlined that
the downside surprises in inflation late in the year could have
been related to transitory factors ... Benign inflation prints
in the coming weeks, and the changes in the central bank's
board, support our view of a 25bps cut, to 4.0%," Credit Suisse
analysts wrote in a note.
    Colombia's peso fell 2.2%, having touched a 10-month
high earlier in the week on strength in oil prices. Recovering
global crude demand is expected to benefit the currencies of oil
exporters Colombia and Mexico this year. 

     Key Latin American stock indexes and currencies:
        Stock indexes                Latest   Daily %
 MSCI Emerging Markets               1319.98     0.35
 MSCI LatAm                          2482.73     1.07
 Brazil Bovespa                    121593.01     2.09
 Mexico IPC                         46091.37     1.11
 Chile IPSA                          4529.23     2.52
 Argentina MerVal                   52410.05    1.022
 Colombia COLCAP                     1440.73     0.33
           Currencies                Latest   Daily %
 Brazil real                          5.3876    -1.59
 Mexico peso                         20.0098    -1.87
 Chile peso                            712.4    -2.40
 Colombia peso                       3486.99    -2.14
 Peru sol                             3.6198     0.11
 Argentina peso (interbank)          85.0000    -0.11
 Argentina peso (parallel)               158     1.27

 (Reporting by Ambar Warrick and Shreyashi Sanyal in Bengaluru;
Editing by Krishna Chandra Eluri)