Latam FX marks slow start to year, Brazilian real slips

Latam FX marks slow start to year, Brazilian real slips

Summary China Evergrande news awaited; shares halted

Brazil’s real falls, Bolsonaro hospitalized

Chile economic activity up 14.3% y/y in Nov

Turkish annual inflation surges past 30%

Jan 3 (Reuters) – Most Latin American currencies fell in slim trade on Monday, with Brazil’s real losing the most on concerns over President Jair Bolsonaro’s health after he was hospitalized with an obstructed gut.

The real sank 1.6%, with Bolsonaro facing potential surgery in the latest complication from a 2018 stabbing. Political uncertainty is set to ramp up in Brazil this year, ahead of presidential elections. read more

Brazilian stocks (.BVSP) also retreated.

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Most other Latin American currencies drifted lower amid uncertainty over the spread of the Omicron COVID-19 variant, even as early consensus showed the variant to be milder than Delta.

Mexico’s peso fell 0.1%. Investors are now awaiting new central bank chief Victoria Rodriguez’s first monetary policy meeting next month to gauge her stance on the pace of interest rate hikes.

“The new governor will face the challenge of bringing inflation back to its target of 3% in the monetary policy horizon, leading up to 2023; of keeping Banxico independent from the potential pressures of the government,” said Citigroup strategists.

Chile’s peso traded flat on Monday, after recording a momentary unexplained 13% spike in the first minute. A central bank poll showed interest rates in the country hitting 5%, while data separately showed Chile’s economic activity jumped 14.3% in November compared to the same period a year earlier.

Broader emerging market currencies were muted, while stocks inched higher. After ending 2021 down about 4.5%, MSCI’s index of EM stocks (.MSCIEF) was up 0.1% in thin trade.

Turkey’s lira rallied more than 2% after sinking as much as 4.5%, in a continuation of volatile trade seen in recent weeks. Data on Monday showed inflation soared to a 19-year high beyond 36% last month. read more

The currency, which hit record lows on policy missteps and was the worst performing EM currency last year with a 44% slide, was last trading at 13 to the dollar.

Meanwhile, investors were also on the lookout for an announcement from embattled property developer China Evergrande (3333.HK). Its shares were halted for trade pending “inside information”, the company said. read more

Default worries saw shares of Evergrande, which has about $300 billion in liabilities, tumble last year and hit the wider property sector.

South Africa’s rand was on course for its best session in two months, while falling oil prices and geopolitical tension kept the Russian rouble flat.

The rouble has been under increased pressure since October on rising tensions with the West regarding its military build-up near Ukraine.

Key Latin American stock indexes and currencies:

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Reporting by Susan Mathew in Bengaluru; Editing by Kirsten Donovan

Our Standards: The Thomson Reuters Trust Principles.

Desk Team

Desk Team