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Bonds News

EMERGING MARKETS-Oil prices lift Mexican peso; Brazil's real leads weekly gains

    * Mexico's peso set for third straight week of gains
    * Brazil's real to add more than 2% for the week
    * MSCI Latam stock index down 0.4%

    By Shriya Ramakrishnan
    Nov 20 (Reuters) - Brazil's real eased on Friday but was set
for weekly gains of more than 2% as signs of improving growth
prospects for Latin America's largest economy lifted sentiment,
while higher crude prices supported the currency of exporter
Mexico. 
    The real underperformed its peers in Latin America,
weakening 0.6% against the dollar on the day and contributing to
a 0.3% drop in a basket of regional currencies.
    A combination of official interest rates being slashed to a
record low and growing concerns over Brazil's fiscal health have
hit the real hard, making it one of the worst-performing
currencies in the region this year. 
    But the currency staged a rebound this week after the
government raised its growth forecast for the year and pledged
to fast track reforms to privatisation and fiscal spending. 
    Brazil's economy minister on Thursday said the country could
end this year having lost only around 300,000 formal jobs, far
less than during the 2015-2016 recession.
    Mexico's peso advanced as much as 0.6% against the
dollar, and was on track for a third consecutive weekly gain, as
prospects for effective COVID-19 vaccines and hopes that OPEC
and its allies will keep production in check lent support to oil
prices.
    "MXN is a carry story pure and simple. When adjusting for
both volatility and liquidity it is still the world's number one
carry currency," said Christian Lawrence, senior market
Strategist at Rabobank. 
    "Any periods of rising demand for risk will see support for
MXN. Domestic fundamentals don't matter at the moment." 
    Market participants have this week largely been caught
between encouraging COVID-19 vaccine developments and concerns
about the damage to the global economy from increased infections
and another round of shutdowns. 
    A gauge of Latin American stocks fell 0.4%
during the day, but was still set to end the week higher.    
    Chile's peso fell 0.2% even as prices of its main
export, copper, surged to their highest in 29 months on Friday.

    Argentina's central bank on Thursday said companies that
participate in the country's natural gas production plan will
have free access to the official foreign exchange
market.
    The move opens a potential loophole in strict capital
controls which have been in place since August last year, aimed
at protecting foreign exchange reserves, after the collapse of
the peso currency. 
    
    Key Latin American stock indexes and currencies:
    
                                Latest    Daily % change
 MSCI Emerging Markets           1204.81            0.36
                                          
 MSCI LatAm                      2173.80           -0.43
                                          
 Brazil Bovespa                106530.74           -0.13
                                          
 Mexico IPC                            -               -
                                          
 Chile IPSA                      4036.34             0.2
                                          
 Argentina MerVal               51036.73            0.17
                                          
 Colombia COLCAP                 1229.11           -0.14 Currencies              Latest    Daily % change
 Brazil real                      5.3428           -0.57
                                          
 Mexico peso                     20.1310            0.24
                                          
 Chile peso                        760.7           -0.24
                                          
 Colombia peso                   3647.86            0.00
 Peru sol                         3.5778           -0.06
                                          
 Argentina peso (interbank)      80.3500           -0.09
                                          
 

 (Reporting by Shriya Ramakrishnan in Bengaluru; Editing by
Kirsten Donovan)
  
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