April 11, 2019 / 9:25 PM / 2 months ago

EMERGING MARKETS-Latam FX hit by strong dollar, stocks drop

 (Recasts throughout, updates prices, adds market strategist's
    By Aaron Saldanha
    April 11 (Reuters) - Latin America currencies softened on
Thursday against a dollar boosted by strong U.S. economic data,
while Latin American stocks slid along with their global peers,
with equities in Argentina and Brazil racking up the heaviest
    U.S. producer prices rose by the most in five months in
March, strengthening the dollar and setting the stage for Latin
American currencies to weaken.        
    MSCI's index of Latin American currencies
snapped a four-session winning run, while its Latin American
stocks index fell 1.1%.
    Brazil's house speaker Rodrigo Maia said pension reform that
would save 1 trillion reais ($259.40 billion) could be approved
in May or June. While government dialogue with Congress has been
lacking, he said, it was improving.
    Investors voted with their feet, however, and the real
 slid 0.9% on its worst day in about two weeks. 
    "We continue to stay on the sidelines in Brazilian assets,
avoiding potential market volatility when pension reform is
debated in the special committee and awaiting better entry when
the committee appears likely to approve the bill," Dirk Willer,
Citi Research's head of emerging market strategy, and Kenneth
Lam, emerging markets FX strategist, wrote in a note.
    Broad-based losses pulled Brazilian stocks
    State-run oil firm Petroleo Brasileiro SA saw its common
shares and preferred shares fall 1.3% and
2.7%, respectively, pressured by sliding oil prices.

    Companhia Energetica de Minas Gerais-CEMIG fell
1.4%. The police raided the power firm's headquarters, saying
they was investigating 40 million reais siphoned out of CEMIG.

    Shares of a CEMIG unit police said was linked to the alleged
scheme, Renova Energia SA, tumbled 4.9 percent. 
    Mexico's peso edged lower and stocks fell
    Peso trading volumes jumped to about 180% of their average
over the past week, Refinitiv Eikon data showed, around the time
minutes from the Mexican central bank's March 28 meeting were
    Financial challenges at Mexican state oil firm Pemex could
threaten macroeconomic stability, said the minutes of the
meeting, at which where the key rate was left at 8.25%. 
    "We highlight that, even though the rate decision was
unanimous, one member of the board, Gerardo Esquivel, did not
agree with the communiqué, which is unprecedented for Banxico,"
wrote strategists at Banorte Research, referring to the central
bank, Banco de Mexico.
    Chile's peso fell 0.3% following a dip in the price
of copper, the country's top export.        
    Argentina's stocks fell 2% to their lowest closest
level since early 2019. The peso firmed, with the central
bank raising the rates payable on short-term notes. 
    Colombia's peso weakened 0.8%, while stocks
dropped 1%. Oil firm Ecopetrol SA was pulled 2.5% lower
by soft oil prices.
    Latin American stock indexes and currencies at 2059 GMT:
 Stock indexes                     Latest        Daily %
 MSCI Emerging Markets                 1087.49     -0.78
 MSCI LatAm                            2807.44     -1.14
 Brazil Bovespa                       94754.70     -1.25
 Mexico IPC                           44580.06     -0.73
 Chile IPSA                            5254.48     -0.45
 Argentina MerVal                     31501.04     -2.03
 Colombia IGBC                        13155.04     -1.02
 Currencies                             Latest   Daily %
 Brazil real                            3.8590     -0.10
 Mexico peso                           18.8260     -0.08
 Chile peso                                665     -0.48
 Colombia peso                         3118.05     -0.78
 Peru sol                                3.298     -0.12
 Argentina peso (interbank)            42.7000      0.77
 (Reporting by Aaron Saldanha in Bengaluru; editing by Grant
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