* Brazil's real leads gains among EM FX peers
* Copper-exposed currencies strengthen
* Peruvian sol edges highs, eyes on weekend presidential
vote
(Adds comments, details; updates prices throughout)
By Shreyashi Sanyal
April 8 (Reuters) - Latin American currencies rose against a
weaker dollar on Thursday as dovish signals from the U.S.
Federal Reserve weakened the dollar and Treasury yields in the
face of an unexpected rise in U.S. weekly jobless claims.
Brazil's real rose 1.3%, even as coronavirus
infections and deaths soared in the country. The country is set
to overtake the United States as the worst stricken by the
pandemic, with a sluggish vaccine rollout adding to investor
concerns.
That, along with stretched fiscal spending and political
woes, made the real one of the worst performing emerging market
currencies in 2020 and again in 2021.
"Coupled with the risk that the lockdown measures might have
to be extended for longer, which would hamper the recovery in
Q2/21, the ongoing uncertainty over the 2021 budget and the
fiscal outlook will be yet another headwind for the recovery in
investor sentiment in the coming weeks," analysts at TS Lombard
wrote in a note.
Broader emerging market stocks and currencies rose on
weakness in the dollar and U.S. treasury yields, after the
minutes from the Fed's latest meeting showed that the bank was
in no hurry to tighten monetary policy.
Pressure from high yields has weighed down emerging market
assets this year, especially in the currency and fixed income
space as yield differences narrowed between risky and more
stable debt.
Chile's peso and the Peruvian sol both gained
on strength in copper prices amid concerns over supply, while
optimism over rising demand in major economies also supported
prices.
Analysts have also praised Chile's vaccination program, even
as the Andean country faces another severe wave of COVID-19
infections.
"Chile's inoculation drive has been impressive, with 60
doses per 100 people administered - more than the U.S. and the
UK," Nikhil Sanghani, Latin America economist at Capital
Economics wrote in a client note.
"While Chile is currently battling with a severe wave of
virus cases, we remain cautiously optimistic about the
resilience of the economy in Q2, and the prospect of a
vaccine-related boost to output over the second half of this
year."
Mexico's peso and Colombia's peso rose on
recent gains in oil prices, as expectations of increased demand
supported the crude market.
Mexican inflation rose above the central bank target in
March, coming in in-line with expectations. The Mexican central
bank held its benchmark rate last month, supporting the peso,
and had forecast slightly higher inflation in the coming months.
The Peruvian sol edged higher, as the country gears
up to vote for a new president on Sunday after a year of
political turmoil, with a focus on the coronavirus pandemic,
economic revival, corruption and mining policy in the world's
No.2 copper producer.
Latam stocks were mostly higher by afternoon trading.
Key Latin American stock indexes and currencies:
Stock indexes Latest Daily %
change
MSCI Emerging Markets 1343.69 0.37
MSCI LatAm 2374.97 0.72
Brazil Bovespa 118222.10 0.51
Mexico IPC 48173.19 0.57
Chile IPSA 4891.43 0.67
Argentina MerVal 49848.05 -0.559
Colombia COLCAP 1327.14 -0.65
Currencies Latest Daily %
change
Brazil real 5.5717 1.31
Mexico peso 20.0890 0.58
Chile peso 708.2 0.72
Colombia peso 3627.55 0.70
Peru sol 3.596 0.33
Argentina peso (interbank) 92.3800 -0.04
Argentina peso (parallel) 137 1.46
(Reporting by Ambar Warrick and Shreyashi Sanyal in Bengaluru;
Editing by Alison Williams and Marguerita Choy)
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