Most Latam FX fall as dollar strengthens globally
Updated at 10:35 a.m. ET/ 1435 GMT
Latam stocks down 0.8%, FX off 0.5%
Mexico's Alsea down after quarterly results
By Shashwat Chauhan and Pranav Kashyap
Oct 23 (Reuters) -Most Latin American currencies fell on Wednesday as the dollar found support from expectations that the Federal Reserve will not cut interest rates at a rampant pace, while investors hunkered down for volatility ahead of the U.S. presidential election.
Brazil's real BRL= led declines, down 0.6% against the dollar to 5.723, hovering above the crucial barrier of 5.7.
Chile's peso CLP= weakened 0.2%, while Colombia's peso COP= lost 0.6%.
The Mexican peso MXN= lost 0.1%, briefly breaching 20 per dollar for the second time this week. Data showed Mexican retail sales rose 0.1% in August from July.
"The Mexican currency would be quite vulnerable to Trump's victory ... higher tariffs would have a very meaningful impact on the balance of payments and on Mexican growth," said Olga Yangol, head of EM research & strategy at Credit Agricole CIB.
The dollar remained in favor as investors bet on a gradual easing cycle at the Fed, with the rise in Treasury yields reflecting that sentiment. US/
Also adding a layer of uncertainty was the U.S. vote on Nov. 5, with possibilities of former President Donald Trump winning further aiding the greenback. Trump's policies and potential tariffs on exports are seen as inflationary.
"The US election results will have major implications for the EM outlook, affecting both the future economic backdrop and geopolitical landscape. A Harris presidency with a divided Congress would present the most limited shock to both the US and EMs," Robert Gilhooly, senior emerging markets economist at abrdn wrote in a note.
MSCI's index for Latin American currencies .MILA00000CUS fell 0.5% amid the broad dollar strength, while a gauge for currencies .MILA00000PUS shed 0.8%.
Shares in Mexican restaurant chain operator Alsea ALSEA.MX tumbled more than 3% after the company reported weak quarterly results.
Elsewhere, leaders of the nations in the BRICS grouping, which accounts for 37% of global economic output, predicted its influence would grow as they met in Russia.
Brazilian President Luiz Inacio Lula da Silva, who took part in the summit via video conference after a head injury over the weekend, said that it is time for BRICS nations to create alternative payment methods.
HIGHLIGHTS
** Foreign debt financing by Brazilian issuers surges in 2024
** Mozambique's dollar bond falls as unrest over disputed election simmers
** Mexican stock exchange suspends trading of Grupo Elektra after just one day
Key Latin American stock indexes and currencies:
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1142.38 | 0.02 |
MSCI LatAm .MILA00000PUS | 2152.8 | -0.81 |
Brazil Bovespa .BVSP | 128807.98 | -0.88 |
Mexico IPC .MXX | 52294.43 | -0.14 |
Chile IPSA .SPIPSA | 6688.88 | 0.21 |
Argentina Merval .MERV | 1772855.22 | -1.919 |
Colombia COLCAP .COLCAP | 1340.12 | -0.31 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.723 | -0.59 |
Mexico peso MXN= | 19.9653 | -0.09 |
Chile peso CLP= | 948.19 | -0.16 |
Colombia peso COP= | 4289 | -0.61 |
Peru sol PEN= | 3.748 | 0.05 |
Argentina peso (interbank) ARS=RASL | 985 | -0.10 |
Argentina peso (parallel) ARSB= | 1220 | 2.05 |
Reporting by Shashwat Chauhan and Pranav Kashyap in Bengaluru; Editing by Andrew Cawthorne
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