Mexican peso leads gains; political uncertainty pressure Brazil's real
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Mexico’s peso rallied on Wednesday ahead
of details regarding the country’s plan to ease out of a
coronavirus-led lockdown, while intensifying political
uncertainty in Brazil weighed on its currency.
Most Latam bourses followed Wall Street into
the red after U.S. Federal Reserve Chairman Jerome Powell warned
of a prolonged recession due to the pandemic. The dollar was
flat, cutting losses after Powell dispelled speculation about
negative interest rates.
“It’s the words that he used. ‘Significant downside risk’ is
a very negative, negative choice of words,” said Kenny Polcari,
chief market strategist at Slatestone Wealth LLC.
Rising fears of a second wave of COVID-19 and nagging
tensions between Washington and Beijing also pressured markets.
Brazil’s real underperformed as new evidence in a
probe revealed that President Jair Bolsonaro planned to change
the federal police chief in Rio de Janeiro to protect his family
from investigation.
Brazil’s prosecutor general is to decide whether to charge
the president with obstruction of justice and abuse of power. If
the Supreme Court and two-thirds of the lower house of Congress
see merit to any charges, Bolsonaro would be suspended and would
stand trial.
Bolsonaro’s popularity has plummeted on his handling of the
COVID-19 outbreak. Bolsonaro fought states over his wish to
reopen gyms and beauty parlors as his country has become a
global hotspot for the pandemic.
Sao Paulo-listed stocks rose on a materials boost.
Iron ore miner Vale rose 1.5% even after the
Norwegian sovereign wealth fund – the world’s largest –
announced it would exclude Vale from its portfolio due to
environmental and human rights issues.
In Mexico, President Andres Manuel Lopez Obrador was to give
more details about how suspended business operations and other
activities would reopen in coming weeks. On Tuesday, the
government okayed a restart to production in the automotive
industry.
The peso firmed 1.3%, while stocks fell 0.9%.
Colombia’s currency fell 0.6% and the stock benchmark
extended losses for a fourth day as the country’s
coronavirus caseload grew.
Key Latin American stock indexes and currencies at 1427 GMT:
Stock indexes Latest Daily %
change
MSCI Emerging Markets 912.82 0.39
MSCI LatAm 1551.80 -1.61
Brazil Bovespa 78338.21 0.6
Mexico IPC 37087.42 -1
Chile IPSA 3706.42 -0.76
Argentina MerVal 38476.52 -1.679
Colombia COLCAP 1068.83 -1.88
Currencies Latest Daily %
change
Brazil real 5.9182 -0.91
Mexico peso 24.1310 0.93
Chile peso 820.7 0.22
Colombia peso 3897.84 -0.57
Peru sol 3.4297 0.09
Argentina peso 67.5400 -0.12
(interbank)
(Reporting by Susan Mathew in Bengaluru; Editing by David
Gregorio)
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