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EMERGING MARKETS-Brazil's real firms; Rising crude prices lift Mexican peso

EMERGING MARKETS-Brazil's real firms; Rising crude prices lift Mexican peso

· 02/05/2021 14:23
EMERGING MARKETS-Brazil's real firms; Rising crude prices lift Mexican peso

Mexican peso set to outpace peers this week

Latam stocks set for best week in 2 months

Chile's peso lags peers this week

Updates prices

By Ambar Warrick and Susan Mathew

- Brazil's real jumped more than 1% on Friday after the economy minister said the country was ready to increase spending to combat a second wave of COVID-19, while strength in oil markets helped crude exporter Mexico's peso.

The real BRBY surged after Economy Minister Paulo Guedes said the country will open spending taps "quickly" to tackle the second wave of the COVID-19 pandemic if Congress demands it, but with an eye on longer-term fiscal stability. nL8N2KB3FH

Brazil treads a precarious line on fiscal spending, after measures to combat the virus helped cause a record deficit in 2020. A report said the government was also in talks to reduce taxes on fuel- a move that could help cool inflation. nL1N2KB0Z9

A Reuters poll showed Brazil's real will hold in last month's trading range in the short term, with strategists closely following discussions over new stimulus plans. nL1N2KA0Q4

Mexico's peso MXN= rose 1.2%, while Colombia's peso COP= added 0.1% against a dollar hit by a disappointing U.S. jobs report strengthening the case for President Joe Biden's $1.9 trillion stimulus package. FRX/

Oil prices hit a one-year high on expectations of recovering demand and supply curbs by producer group OPEC and its allies. O/R

Mexico's peso was set to outperform its peers for the week with an over 2% rise - its biggest weekly gain in three months, having marked large gains earlier in the week on a spike in silver prices.

But the currency was dealt a blow after the supreme court on Wednesday struck down the government's crucial energy sector reform.

"Despite the recent positive prints... the outlook for real activity in Mexico remains uninspiring due to a combination of mostly domestic factors, including the underwhelming policy response, particularly on the fiscal front," Goldman Sachs analysts said.

Chile's peso CLP= was among the worst performing Latam currencies this week, set for a 0.6% loss on weakness in the prices of copper, the country's largest export. The currency fell half a percent on Friday. MET/L

Latin American stocks rose on Friday, with the MSCI's index .MILA00000PUS adding 2%. The index was also set for its best week since early-December, as it recovered from a series of weekly losses.

Sao Paulo's Bovespa .BVSP led gains, up 1.3%, as Petrobras PETR4.SA, PETR3.SA jumped after Brazil's President Jair Bolsonaro said he won't interfere with pricing policy set by the oil major, but would instead seek to reduce prices via tax changes. nL1N2KB1IF


Key Latin American stock indexes and currencies:

Stock indexes

Latest

Daily % change

MSCI Emerging Markets .MSCIEF

1396.65

0.65

MSCI LatAm .MILA00000PUS

2412.71

2.06

Brazil Bovespa .BVSP

120783.26

1.28

Mexico IPC .MXX

44344.44

0.4

Chile IPSA .SPIPSA

4450.55

0.87

Argentina MerVal .MERV

51125.16

0.873

Colombia COLCAP .COLCAP

1369.31

0.71




Currencies

Latest

Daily % change

Brazil real BRBY

5.3780

1.28

Mexico peso MXN=D2

20.1389

1.15

Chile peso CLP=CL

736.7

-0.23

Colombia peso COP=

3553.75

0.08

Peru sol PEN=PE

3.6367

0.17

Argentina peso (interbank) ARS=RASL

88.0000

-0.09


(Reporting by Ambar Warrick in Bengaluru; editing by Philippa Fletcher and Alistair Bell)

((Ambar.Warrick@thomsonreuters.com; +91-80-6182-2837; Reuters Messaging: ambar.warrick.thomsonreuters.com@reuters.net; Twitter: @AmbarWarrick))