October 17, 2019 / 8:43 PM / 2 months ago

EMERGING MARKETS-Dollar doldrums lift Latin American currencies

 (Updates market prices)
    By Susan Mathew and Sruthi Shankar
    Oct 17 (Reuters) - Most Latin American currencies were
supported by a weak dollar on Thursday after the British
government and the European Union agreed on a long-awaited
Brexit deal, although Brazil's Bovespa stock index broke a
six-day winning streak.
    The dollar fell sharply against the euro on the Brexit deal,
spurring gains in most emerging market currencies even as Prime
Minister Boris Johnson still faces a knife-edge vote in
parliament on Saturday to get it approved.
    The Colombian peso and the Chilean peso gained
0.2% and 0.7%, respectively, while the Mexican peso held
steady after a six-day run of gains.
    Mexico's President Andres Manuel Lopez Obrador vowed to
increase wages and funding for the implementation of labor
reforms, part of a campaign to convince U.S. Democratic
lawmakers to ratify a new North American trade deal.

    The Colombian peso recovered from early lows following news 
Congress approved a 2020 government budget of 271.7 trillion
pesos ($78.7 billion) on Wednesday, hours after the top court
rolled back a tax reform proposal. 
    The government now has to pass a new law. Morgan Stanley
analysts had warned risk premia would increase in Colombian
assets if the law was overturned.
    "With low approval ratings and limited time, the next few
weeks should be challenging for the current administration and
volatility in local assets will likely increase."
    "Additionally, local elections on October 27 are likely to
add further noise to any potential upcoming Congressional
debates around the law, suggesting further downside risks around
the new approval process," Morgan Stanley said.
    The Brazilian real dipped 0.4%, continuing its slide
from earlier this week after weak inflation data prompted bets
of more interest rate cuts by the central bank.
    Brazilian stocks also edged lower, dragged down by
shares in banks and oil firm Petrobras.
    
    Key Latin American stock indexes and currencies at 1951 GMT:
    
        Stock indexes                  Latest       Daily %
                                                     change
 MSCI Emerging Markets                    1028.69        0.45
 MSCI LatAm                               2704.90       -0.15
 Brazil Bovespa                         104969.47       -0.43
 Mexico IPC                              43421.82       -0.27
 Chile IPSA                               5172.31        0.43
 Argentina MerVal                        31833.20       3.492
 Colombia IGBC                           12872.70        0.17
                                                             
           Currencies                  Latest       Daily %
                                                     change
 Brazil real                               4.1680       -0.35
 Mexico peso                              19.1990        0.01
 Chile peso                                711.25        0.71
 Colombia peso                             3448.5        0.23
 Peru sol                                   3.349        0.39
 Argentina peso (interbank)               58.3150        0.06
                                                   
 
 (Reporting by Susan Mathew and Sruthi Shankar in Bengaluru;
Editing by Chizu Nomiyama)
  
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