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Latam FX, stocks fall; head for weekly falls as Evergrande worries linger

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Most currencies and stocks across Latin

America were subdued on Friday as questions arose about whether

China Evergrande will make a key interest payment that could

avoid a potential global fallout, with Brazil’s real lagging its

peers for the week.

The MSCI’s index for Latin American currencies

was down 0.8%, with the currencies taking cues

from Asian counterparts on fears that Beijing will let overseas

bondholders swallow large losses as a liquidity crisis deepens

at China Evergrande.

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Brazil’s real weakened 0.7% against the dollar

in early trading a day after the Brazilian central bank’s move

to raise interest rates was seen as less hawkish than expected.

The currency is headed for its third straight weekly decline to

fall 1%.

Adding to the downbeat mood, data showed consumer confidence

in Brazil reached a 5-month low in September, as higher

inflation, potential problems in electricity supplies and

political uncertainty contributed to pessimism.

“The significant rise in inflation since the beginning of

the year amid still high unemployment rates are likely the main

reasons behind the recent deterioration in consumer confidence,”

strategists at Citi Research wrote in a client note.

Brazil’s central bank also detailed the credit lines that it

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will offer to banks at the end of the year, when emergency loans

issued in 2020 to ride out the pandemic will expire.

The Mexican peso dipped 0.1%, set to close the week

with declines of 0.2%. Data showed Mexican retail sales fell

0.4% in July from June.

Copper producer Chile’s currency was also set to end

the week with declines. The country’s President Sebastian Pinera

unveiled an $82.1 billion draft budget for 2022 on Thursday that

he said would begin to tame a ballooning deficit, following more

than a year of emergency spending to combat the coronavirus

pandemic.

The Colombian peso fell 0.1%, while Peru’s Sol

bucked the trend to firm 0.3%.

Latin American bourses also traded decidedly in the red,

with the MSCI’s index falling 1.5% and tracking

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its fourth straight weekly loss.

Chilean shares fell 0.9%, leading declines among

its peers, tracking lower copper prices.

Key Latin American stock indexes and currencies at 1840GMT:

Stock indexes Latest Daily %

change

MSCI Emerging Markets 1264.19 -0.65

MSCI LatAm 2300.77 -1.49

Brazil Bovespa 113108.59 -0.84

Mexico IPC 51244.93 -0.43

Chile IPSA 4373.77 -0.86

Argentina MerVal 74273.47 -0.629

Colombia COLCAP 1303.55 -0.66

Currencies Latest Daily %

change

Brazil real 5.3465 -0.71

Mexico peso 20.0650 -0.11

Chile peso 792.9 -1.06

Colombia peso 3835.31 -0.10

Peru sol 4.1082 -0.30

Argentina peso (interbank) 98.5600 -0.02

Argentina peso (parallel) 183 1.09

(Reporting by Shreyashi Sanyal in Bengaluru; Editing by Andrea

Ricci and Diane Craft)

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In-depth reporting on the innovation economy from The Logic, brought to you in partnership with the Financial Post.

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