December 5, 2019 / 7:52 PM / 2 months ago

EMERGING MARKETS-Latam FX firm; Petrobras rally takes Bovespa to new highs

    * Petrobras rises 2%, says may divest billions more than
    * Chile stocks, peso rise; central bank holds benchmark rate
    * Argentine c. bank chief resigns as new govt takes office

    By Susan Mathew
    Dec 5 (Reuters) - Brazil's real and Chile's peso touched
two-week peaks to lead Latin American currencies higher on
Thursday as they capitalized on the dollar's weakness, while a
rally in stocks saw Brazil shares scale new highs. 
    Stocks took support from lingering optimism over the
Sino-U.S. trade war, after a Bloomberg report as well as
positive comments from U.S. President Donald Trump brewed some
hope over a "phase-one" trade deal.
    Regional markets have also been propped up by some positive
economic readings this week, with better-than-expected GDP data
from Brazil, Latin America's largest economy, being the most
    Brazilian stocks extended Wednesday's gains to touch
a fresh record high, boosted by shares of state oil firm
Petroleo Brasileiro SA.
    Petrobras, as the firm is commonly known, rose more than 2%
after its executives said it could add several billion dollars
of assets to its already ambitious five-year divestment plan.

    Adding to the optimism, Treasury Secretary Mansueto Almeida
said Brazil's economy is entering 2020 on a stronger footing
than originally hoped for. 
    Brazil's currency gained 0.5% to 4.185 against the
greenback which languished at one-month lows. A
Reuters poll showed that the real is expected to be one of the
notable gainers in emerging markets in 2020, firming to 3.97 per
    In Chile, stocks rose to a two-week high, while
the peso firmed 0.7%. The currency has been propped up by
a massive central bank stimulus program, which went into effect
earlier in the week.  
    Chile's central bank on Wednesday held its benchmark
interest rate and said it would likely keep it there for the
next several months, even as weeks of protests begin to hammer
the country's economy.
    However, the bank also slashed its economic growth forecasts
for 2019 and 2020 on Thursday, warning that effects of the
unrest would linger into next year.
    "Though it's too early to say, especially if the Chilean
peso reverses quickly and beyond the central bank's
expectations, the higher inflation forecasts bias the next move
to a hike," Citi analysts wrote in a note.
    "As for FX, a hawkish central bank with no cuts on the
horizon should help stabilize the currency, which has been
plagued by its low carry." 
    The Argentine peso fell after central bank chief
Guido Sandleris resigned on Wednesday, an expected step as Latin
America's third-largest economy transitions to Peronism next
week under newly elected President Alberto Fernandez.

    Key Latin American stock indexes and currencies at 1933 GMT:
  Stock indexes           Latest       Daily %
 MSCI Emerging             1043.94           0.71
 MSCI LatAm                2723.58           0.69
 Brazil Bovespa          110666.67           0.33
 Mexico IPC               42211.92           0.05
 Chile IPSA                4735.10           1.94
 Argentina MerVal         35045.84          1.021
 Colombia COLCAP           1612.73           0.04
     Currencies           Latest       Daily %
 Brazil real                4.1856           0.38
 Mexico peso               19.3510           0.38
 Chile peso                  781.6           0.79
 Colombia peso                3462           0.16
 Peru sol                    3.379           0.00
 Argentina peso            59.9750          -0.15

 (Reporting by Susan Mathew and Ambar warrick in Bengaluru;
Editing by Nick Zieminski)
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