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US, Brazilian markets shut for holiday
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Colombian court suspends President Petro's labor reform
referendum decree
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Israel-Iran conflict enters seventh day, sapping risk
appetite
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Latin American currencies down 0.1%, stocks shed 0.5%
(Updates with mid-session prices)
By Medha Singh and Pranav Kashyap
June 19 (Reuters) - Latin American currencies slipped
for a second straight day on Thursday, as traders, thinned out
by holidays in the U.S. and Brazil, kept a close eye on
escalating Iran-Israel tensions that eclipsed a busy slate of
central bank meetings.
Israel bombed nuclear targets in Iran, Iranian missiles hit an
Israeli hospital overnight and U.S. President Donald Trump kept
the world guessing about whether Israel's superpower ally would
join it in airstrikes.
Israel's shekel dipped 0.3% while Tel Aviv's
blue-chip index hit a fresh record high.
MSCI's index for Latin American currencies
fell 0.1%, but remained not far from an all-time high hit on
Tuesday. Markets in Brazil, the region's biggest economy, were
shut for a holiday.
"Markets have been pretty muted so far. The view is that they're
pricing in a smaller likelihood of a complete ban on oil or
disruption," said Lilian Chovin, head of asset allocation at
Coutts.
"Even if the U.S. were to get involved, the markets'
perception is that the conflict will remain localized."
Latin American currencies have emerged as top performers
among emerging markets this year, driven by attractive
valuations, a weakening global dollar, and limited fallout from
Trump-era tariff policies.
Mexico's peso dipped 0.3% as a preliminary estimate from
the national statistics agency showed the country's economy
likely contracted 0.3% in May from the same month a year
earlier.
Investors also were keeping a close watch on Hurricane Erick as
it lost strength, being downgraded from a powerful Category 4
storm to a Category 1. Despite the weakening winds, Erick
battered businesses, wrecked boats, and flooded streets in
southern Mexico.
The storm's impact also could have financial repercussions.
Icosa, which manages insurance-linked securities, noted on
LinkedIn that Erick might trigger a partial payout from Mexico's
parametric catastrophe bond. Issued by the World Bank in 2024,
the $175 million bond was designed to help the country manage
the risks of Pacific hurricanes.
Colombia's peso eased 0.4% to hit nearly a two-month
low.
A Colombian high court on Wednesday suspended a decree by
President Gustavo Petro that sought to call a controversial
referendum on his proposed labor reform, the latest setback for
the leftist leader's effort to broadly expand worker benefits.
Elsewhere, the Turkish lira eased 0.2% after the
country's central bank held its key interest rate steady at 46%,
as expected, and also kept the upper band of its rate corridor
at 49% despite predictions it would be lowered.
A day earlier, Brazil's central bank decided unanimously to lift
its benchmark Selic rate to 15%, marking its seventh consecutive
hike amid unanchored inflation expectations and resilient
economic activity.
The real hit 5.465 per dollar on Tuesday, its highest
level in eight months.
The Argentine peso tumbled 1.9%, outpacing declines
across the region, after fresh data revealed the nation's
unemployment rate unexpectedly edged up to 7.9% in the first
quarter, which was higher than the 7.7% seen a year ago.
The Chilean peso shed 0.4%.
MSCI on Tuesday will announce its decision on whether the
country will move to its "Emerging Market" index from current
"Frontier Market," a decision that could spur capital flows into
the region.
The Peruvian sol rose 0.1%.
Stock markets in the region were mixed, with the benchmark index
in Mexico down 1%. Chile's key stock market index
slipped 0.5% while Argentina edged higher.
Key Latin American stock indexes and currencies:
MSCI Emerging Markets 1178 -1.29
MSCI LatAm 2281.07 -0.46
Brazil Bovespa 138716.64 -0.09
Mexico IPC 56142.02 -1.04
Argentina Merval 2063953.4 0.632
6
Chile IPSA 8043.73 -0.54
Colombia COLCAP 1652.09 0.08
Currencies Latest Daily %
change
Brazil real 5.491 0
Mexico peso 19.047 -0.27
Chile peso 939.65 0.23
Colombia peso 4085.5 -0.44
Peru sol 3.589 0.14
Argentina peso (interbank) 1165 -1.93
Argentina peso (parallel) 1180 0.85