By, 0 Min Read * Real is down nearly 6% in the last eight sessions * Chilean economic development is accelerating * Mexican peso trails
(Price changes)
Susan Mathew and Ambar Warrick
12 JULY (Reuters) – The Brazilian real rose sharply on Monday, driving advances across Latin American currencies, on predictions of an economic resurgence this year, but an increase in global cases of the Delta COVID-19 variant urged caution.
Following major graft charges relating to vaccine procurement against the government, the real rose 1.5 percent after falling 6.3 percent in the previous eight sessions.
The sponsor of Brazil’s planned income tax reform said on Monday that under a bill he wants to present on Tuesday, Brazilians will pay 20 billion reais ($3.85 billion) less in taxes.
“Brazil has seen a true reduction in risk premia as growth, inflation, and tax revenues have all outperformed expectations, lowering fiscal risk premia as the (central bank) has become more hawkish. In comparison to peers, this should maintain BRL well supported “JPMorgan FX strategists stated.
However, they warned that political tensions could enhance the risk premium on the real. They also predicted that Latam currencies will struggle to strengthen versus the dollar by the end of the year.
Chile’s peso gained 0.6 percent after a central bank survey of economists revealed that the economy will grow by 16.5 percent in June and 11.9 percent in the third quarter. Meanwhile, the government raised its forecast for economic growth in 2021 from 6% to 7.5 percent on Monday.
Despite predictions of a strong return, doubts about the country’s new constitution have kept Chilean assets on the sidelines in recent months.
The peso fell behind the dollar, trading flat against it as an increase in COVID-19 infections and its virulent Delta version prompted concerns about the economy’s pace and progress.
The peso’s decline against the dollar, according to JPM experts, should be limited this year. They anticipate three more rate hikes in Mexico this year, as well as sustained fiscal support from the United States through the current account and industrial sectors.
Despite declining crude prices, Brazilian oil behemoth Petrobras surged in the stock market. On Monday, the firm said it anticipated to recover $1.274 billion if an agreement on the Itapu field could be reached.
On Monday, Argentina’s securities regulator tightened limits on some bond deals, decreasing a weekly limit on trading of local and international bonds as part of a broader crackdown on alternative foreign currency channels.
The following are some of the most important Latin American stock indexes and currencies:
Indexes of stocks The most recent daily percent change
Emerging Markets 1327.23 0.69 MSCI Emerging Markets
MSCI Latin America (LatAm) 2569.57 2.3
Brazil’s Bovespa index closed at 127719.50, up 1.83 percent.
IPC 49819.55 0.1 Mexico IPC 49819.55 0.1 Mexico IPC 49819.55
IPSA 4231.78 -0.38 Chile IPSA 4231.78 -0.38 Chile IPSA 4231.78
Argentina MerVal 63791.61 2.277 MerVal 63791.61 2.277 MerVal 63791.61
COLCAP 1298.93 0.46 COLCAP 1298.93 0.46 COLCAP 1298.93 0.46
Brazil real 5.1812 1.48 USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD
Mexico’s peso is currently 19.8690 -0.10.
742.8 0.74 pesos (chilean peso)
3818.1 0.23 pesos Colombian peso
3.9539 0.12 Peruvian sol
Argentina’s peso is now trading at 96.0900 -0.10. (interbank)
(Ambar Warrick contributed reporting; Andrea Ricci and Richard Chang edited the piece.)/n
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