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EMERGING MARKETS-Latam markets lead broader EM recovery; Brazil's real jumps after inflation data
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EMERGING MARKETS-Latam markets lead broader EM recovery; Brazil's real jumps after inflation data
Aug 9, 2024 9:33 AM

(Updated at 1530 GMT)

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Brazil inflation rises in July

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Mexican peso rises after rate cut, Peruvian sol falls

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Argentina's Merval leads weekly gains in Latam

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Ukraine begins formal approval process for bond

restructuring

By Lisa Pauline Mattackal

Aug 9 (Reuters) - Latin American stocks and currencies

climbed on Friday, continuing a strong day for emerging markets

as easing worries about U.S. economic growth helped risk assets

regain some ground, while Brazil's real led regional currency

gains after higher-than-expected inflation figures.

MSCI's Latin American stocks index leapt

2.2% on the day, while the regional currency index

gained 1.6%.

The indexes were heading for 5% and 3.2% gains for the week,

respectively. The share index is on track for its best week

since October 2023, and the currency index for its best since

March 2023, erasing losses from a steep selloff earlier in the

week.

Both have outperformed the broader emerging markets stocks

and currency indexes, both also on

course for weekly gains.

Brazil's real jumped 0.8% to a three-week high against the

dollar, leading regional currency gains after data showed

consumer prices rose 0.38% in July, accelerating from 0.21% in

June and exceeding economists' forecasts.

Brazil's central bank minutes released earlier in the week

showed policymakers are prepared to hike interest rates again if

inflation worsens.

Mexico's peso rose 0.2% against the dollar after its

central bank cut interest rates on Thursday but signaled it

expected higher inflation.

"The balance of risks did not change. We continue to

forecast three additional 25bp rate cuts until the end of 2024,"

economists at Goldman Sachs wrote in a note.

Mexico's peso was among the worst-hit currencies during a

turbulent week that followed a global selloff on Monday in

response to some poor U.S. economic data that deepened worries

about slowing global growth and sparked a massive unwinding of

yen-funded carry trades.

U.S. jobless claims data on Thursday helped risk assets

recover, while stronger China inflation data also helped soothe

worries about deflation in the world's second largest economy.

However, Peru's sol lagged regional peers, losing

0.4% after an unexpected interest rate cut on Thursday.

Meanwhile, the Russian rouble weakened over 2.3% against the

dollar, according to LSEG data, touching a near one-month

low.

"Escalating fighting between Russian and Ukrainian troops in

Russia's Kursk region are most likely the source of selling

pressure on the rouble," said Piotr Matys, senior currency

analyst at InTouch Capital Markets.

Elsewhere, Ukraine began the formal creditor approval

process of its offer to restructure its roughly $20 billion of

international bonds.

The Israeli shekel firmed against the dollar to its

strongest in over a week, with the dollar losing 1.4% against

the Israeli currency.

Emerging market equities have seen inflows of $2.3 billion

over the past 10 weeks, according to data from Bank of America

Global Research. However, EM debt has seen outflows for the past

two weeks.

Key Latin American stock indexes and currencies

MSCI Emerging Markets 1063.31 1.62

MSCI LatAm 2238.75 2.24

Brazil Bovespa 129695.43 0.8

Mexico IPC 52891.87 0.03

Chile IPSA 6330.85 0.59

Argentina Merval 1557735.6 1.788

7

Colombia COLCAP 1309.72 0.81

Currencies Latest Daily %

change

Brazil real 5.5064 0.77

Mexico peso 18.824 0.19

Chile peso 931.81 0.36

Colombia peso 4066.88 -0.2

Peru sol 3.722 -0.35

Argentina peso (interbank) 936.5 0

Argentina peso (parallel) 1345 2.2304832

71

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