January 10, 2019 / 10:14 PM / 8 months ago

EMERGING MARKETS-Latam FX fall as dollar rises; Bovespa hits 94,000

 (Adds market details throughout)
    Jan 10 (Reuters) - Latin American currencies fell against a
strong dollar on Thursday after Federal Reserve Chairman Jerome
Powell said the central bank intends to further shrink the
balance sheet, suggesting it may not be done tightening monetary
policy yet.
    MSCI's index for Latin American currencies
fell 0.3 percent with Brazil's real and Argentina's peso
 leading declines as the U.S. dollar rallied from
three-month lows after the Fed Chairman's comments.
    Powell also said he did not see near-term recession risk for
the world's largest economy but raised concerns about the size
of U.S. debt causing Wall Street indexes to fall although they  
later closed higher.
    His statement about the amount of the budget deficit and the
national debt rising spooked the market a little bit, said Randy
Frederick, vice president of trading and derivatives for Charles
    Meanwhile, stocks in Latin America were mostly positive,
with Brazil's Bovespa closing at a historical high after
having hit the 94,000 mark at the day's high, driven by banking
stocks and as investor sentiment remained positive towards the
country's proposed reforms led by President Jair Bolsonaro. 
    Bolsonaro's proposed overhaul of the country's costly state
pension system is being seen as a game changer as it is 
believed to be the main cause of chronic budget deficits and a
mounting and unsustainable public debt.
    The largest gainers on the Bovespa index were consumer
electronics firm Via Varejo  and credit lending firm
Cielo, while the biggest drag was Brazilian wireless
carrier Tim Participacoes after Credit Suisse changed
its outlook to "neutral" for the stock.
    Buenos Aires' MerVal stock index climbed over 1
percent boosted by gains of financial and energy stocks led by
holding company Grupo Supervielle SA, the top gainer
on the index. 
    Chile's benchmark index recorded its tenth
consecutive rise led by gains in shares of forestry companies,
while the country's currency closed a shade higher driven
by currency sales by banks and institutional funds. 
    Stock markets in Mexico closed higher but cautious
sentiment weighed as the country faced a mounting crisis as
gasoline shortages spread across the country after the
government closed several key pipelines to prevent theft by
organized crime groups. 
    The head of Mexico's central bank said on Thursday that the
country's economy and inflation rate could be negatively
affected if fuel distribution problems persist.
 Key Latin American stock indexes and currencies at 2130 GMT 
 Stock indexes                 Latest      Daily
 MSCI Emerging Markets            998.67      0.43
 MSCI LatAm                     2,833.15      0.33
 Brazil Bovespa                93,805.93      0.21
 Mexico IPC                    43,709.34      0.14
 Chile IPSA                     5,297.95      0.64
 Argentina MerVal              34,167.45      1.18
 Colombia IGBC                 11,628.48      0.34
 Currencies                    Latest      Daily
 Brazil real                      3.7105     -0.87
 Mexico peso                     19.1332      0.47
 Chile peso                        675.2      0.02
 Colombia peso                   3,135.4     -0.05
 Peru sol                          3.341     -0.09
 Argentina peso                  36.8500     -1.12

 (Reporting by Agamoni Ghosh in Bengaluru; Additional reporting
Sruthi Shankar and Medha Singh; Editing by Phil Berlowitz)
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