December 9, 2019 / 7:50 PM / a month ago

EMERGING MARKETS-Most Latam FX firm, Argentine peso stable after cabinet picks

 (Updates prices)
    By Susan Mathew
    Dec 9 (Reuters) - Latin American currencies firmed on
Monday, with Brazil's real touching a month's high and Mexico's
peso extending gains to a fifth session, as the dollar held
steady in the face of poor export data highlighting the need for
a U.S.-China trade deal.
    In Argentina, the battered peso was stable, while bond
prices rose and country risk spreads tightened, showing the
market took President-elect Alberto Fernandez's cabinet picks -
featuring debt restructuring expert Martin Guzman as economy
minister - in stride.
    Argentine markets had been on edge since Fernandez thumped
President Mauricio Macri in the August primary election as it
signaled a shift away from Macri's pro-business policy stance. 
    Broader sentiment was swayed by weak export data from China
that served to remind investors of the economic slowdown bought
about by the Sino-U.S. trade war, although markets have so far
held out hope for an interim deal before the Dec. 15 deadline.

    "If the December tariffs on China go ahead, then our
(bullish) view (on EM) is going to come under more significant
pressure, with the anticipated EM growth recovery pushed from Q1
2020 to Q3 2020,"  Morgan Stanley analysts wrote in a note. 
    Investors will also be watching for outcomes of the U.S. and
European central bank policy meetings this week, while locally
Brazil's rate decision is also awaited.
    Brazil's real rose 0.2%. On Wednesday, the monetary
policy committee is expected to lower its key interest rate to a
new low of 4.50%, but stronger-than-expected economic data
suggest this may be the last cut in the cycle, a Reuters poll
    "We think monetary policy is now about to enter a prolonged
period of inaction, and the accommodative environment that's
here to stay will help accelerate ongoing changes in local
credit markets and deepen the recovery," said Gustavo Rangel,
chief economist, LATAM at ING.
    Sao Paulo-listed shares were flat, but carrier Gol
Linhas Aereas Inteligentes and its loyalty program,
Smiles Fidelidade rallied after Gol made a more
generous offer to buy out Smiles.
    Mexico's peso gained 0.5%, while stocks
climbed 0.2% as the country's government urged United States to
push through the United States-Mexico-Canada trade deal.

    Data on Monday showed that Mexico's annual inflation fell
below the central bank's 3% target in November, adding to
expectations that the bank will cut rates further.
    Key Latin American stock indexes and currencies at 1937 GMT:
    Stock indexes             Latest    Daily %
 MSCI Emerging Markets         1051.70      0.26
 MSCI LatAm                    2757.13      0.87
 Brazil Bovespa              111098.25     -0.02
 Mexico IPC                   42023.28       0.2
 Chile IPSA                    4748.20      0.52
 Argentina MerVal             36218.77    -0.939
 Colombia COLCAP               1610.12      -0.1
       Currencies             Latest    Daily %
 Brazil real                    4.1305      0.35
 Mexico peso                   19.2294      0.37
 Chile peso                      775.2      0.24
 Colombia peso                  3413.8      0.20
 Peru sol                        3.374      0.09
 Argentina peso                59.9400      0.02
 (Reporting by Susan Mathew and Ambar Warrick in Bengaluru;
Editing by Marguerita Choy)
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