EMERGING MARKETS – Brazilian real increases after 8 days of losses

    * Real down nearly over 6% over past 8 sessions
    * Chilean economic growth seen surging
    * Mexican peso lags

 (Updates prices)
    By Ambar Warrick and Susan Mathew
    July 12 (Reuters) - Brazil's real rallied strongly on Monday
on expectations of an economic recovery this year, leading gains
across Latin American currencies, but a surge in global cases of
the Delta COVID-19 variant prompted caution. 
    The real rose 1.5% after tumbling 6.3% over the past
eight sessions, in the wake of serious graft allegations related
to vaccine procurement against the government. 
    The sponsor of Brazil's planned income tax reform said on
Monday that Brazilians would pay 20 billion reais ($3.85
billion) less in taxes under a bill he plans to present on
    "Brazil has seen a genuine fall in risk premia as growth,
inflation and tax revenues have all surprised positively
reducing fiscal risk premia, whilst at the same time the
(central bank) has been turning more hawkish. ... This should
keep BRL well supported versus peers," said FX strategists at
    But they warned that political tensions could raise the
real's risk premium. More broadly, Latam currencies will
struggle to appreciate against the dollar by year-end, they
    Chile's peso rose 0.6% as a central bank survey of
analysts showed the economy is expected to expand by 16.5% in
June and by 11.9% in the third quarter. Meanwhile, the
government on Monday revised upwards its projection for 2021
economic growth to 7.5% from 6%.
    But despite expectations of a strong rebound, concerns over
the drafting of the country's new constitution have held back
Chilean assets in recent months.
    Mexico's peso lagged, trading flat against a dollar
that gained momentum as a surge in COVID-19 cases and its
infectious Delta variant raised questions about the pace and
progress of economic growth.
    JPM strategists said the peso's weakness against the dollar
should be contained this year. They expect three more rate hikes
in Mexico this year and a continued spillover of U.S. fiscal
stimulus via the current account and manufacturing sector. 
    Among stocks, Brazilian oil major Petrobras
 rose despite falling crude prices. The company said
on Monday it expected to recover $1.274 billion on reaching an
agreement regarding the Itapu field.
    In Argentina, the securities regulator tightened rules on
some bond trades on Monday, lowering a weekly limit on trading
of local and international bonds amid a wider clampdown on
alternative channels used to access foreign exchange.    
    Key Latin American stock indexes and currencies:
   Stock indexes           Latest    Daily %
 MSCI Emerging Markets      1327.23     0.69
 MSCI LatAm                 2569.57      2.3
 Brazil Bovespa           127719.50     1.83
 Mexico IPC                49819.55      0.1
 Chile IPSA                 4231.78    -0.38
 Argentina MerVal          63791.61    2.277
 Colombia COLCAP            1298.93     0.46
      Currencies           Latest    Daily %
 Brazil real                 5.1812     1.48
 Mexico peso                19.8690    -0.10
 Chile peso                   742.8     0.74
 Colombia peso               3818.1     0.23
 Peru sol                    3.9539     0.12
 Argentina peso             96.0900    -0.10

 (Reporting by Ambar Warrick; Editing by Andrea Ricci and
Richard Chang)

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