Bonds News

EMERGING MARKETS-Latam FX reclaim losses as dollar wanes

    * Chilean peso leads gains for second session 
    * Dollar weakens after yuan fix lifts risk currencies
    * Investors eye runoff elections in U.S. state of Georgia

 (Updates prices throughout)
    By Shreyashi Sanyal
    Jan 5 (Reuters) - Latin American currencies rose on Tuesday
after the dollar weakened on China's decision to lift its
official yuan exchange rate by its highest margin since it
abandoned a dollar peg in 2005. 
    China's central bank set the official yuan midpoint
 at 6.4760 per dollar, while the downward move in the
greenback pushed riskier currencies higher, with investors also
keeping an eye on the United States Senate runoff elections in
    "Think markets will eventually move to price in more fiscal
support and ... this would push additional USD downside momentum
particularly against Asia FX," said Mazen Issa, senior FX
strategist at TD Securities. 
    Brazil's real rose 0.1% after dropping nearly
2% on Monday. The country posted a negative trade balance in
    The UK variant of the coronavirus was confirmed in Sao Paulo
on Monday, while China's suspension of imports from a Brazilian
pork plant, over coronavirus issues, also raised concerns over
any disruptions to Brazil's agriculture exports.
    Brazil is among the worst hit by the coronavirus and is
racing to ramp up inoculations, playing catch up to neighboring
Chile and Argentina, where they are underway.
    Concerns over the pandemic and Brazil's fiscal health saw
the real underperform most emerging market currencies in 2020.
It has also marked a weak start to 2021.
    Chile's peso outperformed its peers for a second
session, rising 1.2% after the country's economic activity grew
in November for the first time since the start of the COVID-19
pandemic in the South American nation.
    Risk-linked assets, particularly those in Latin America, are
expected to recover this year on the back of loose monetary
policy, large stimulus measures and the eventual vaccination of
the populace.
    "Although the pandemic is weighing on the global economy at
the moment, vaccinations are picking up speed in many countries.
Fiscal and monetary policy are highly supportive, and financial
conditions are very loose. We therefore continue to expect
strong global growth in 2021, despite recent virus headlines,"
Mark Haefele, chief investment officer at UBS Global Wealth
Management wrote in a note.
    Currencies of oil exporters Mexico and Colombia
 rose in tandem with a rise in oil prices.
    The Mexican government raised $3 billion in a 50-year note
offering that was more than three times oversubscribed. The move
is part of a bid to increase government finances after a spike
in spending due to the pandemic.
    Latin American stock indexes and currencies:
          Stock indexes                   Latest   Daily %
 MSCI Emerging Markets                    1320.13      1.2
 MSCI LatAm                               2459.21    -0.03
 Brazil Bovespa                         119455.15     0.51
 Mexico IPC                              44704.27        0
 Chile IPSA                               4367.18     2.58
 Argentina MerVal                        51533.96    1.583
 Colombia COLCAP                          1412.67    -0.38
              Currencies                  Latest   Daily %
 Brazil real                               5.2640    -0.01
 Mexico peso                              19.8620     0.46
 Chile peso                                 695.2     1.25
 Colombia peso                            3441.25     0.18
 Peru sol                                  3.6277     0.01
 Argentina peso (interbank)               84.7900    -0.11
 Argentina peso (parallel)                    156     5.77
 (Reporting by Ambar Warrick and Shreyashi Sanyal in Bengaluru;
editing by Barbara Lewis and Grant McCool)