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EMERGING MARKETS-Currencies firm against flat dollar; Mexico peso hits 2-week high

· 03/16/2021 15:53
EMERGING MARKETS-Currencies firm against flat dollar; Mexico peso hits 2-week high

Russia's rouble nears seven-month high against dollar

BlackRock overweight on EM equities

Argentine peso depreciation to slow in coming months -Guzman

Adds comments, details, updates prices throughout

By Shreyashi Sanyal

- Most major emerging market currencies were higher on Tuesday against a largely flat dollar steadying ahead of the U.S. Federal Reserve's policy decision.

Russia's rouble RUB= touched its highest since July despite declining oil prices, while Turkey's lira TRY= firmed half a percent.

Brazil's real BRBY, BRL= rose 0.5% to 5.61 per dollar, easing back from an initial gain to 5.56 after official figures showed Brazil's economy created more than a quarter of a million formal jobs in January, the strongest growth for that month since comparable records began in 1992. nL1N2LE1G3

Locally, eyes were on the central bank's rate meeting on Wednesday when it was expected to hike rates to contain inflation.

Elsewhere in Latin America, Mexico's peso MXN= hit a two-week high, while Colombia's currency COP= recovered from its worst day in four months.

Focus in Mexico as in most other markets was on the Fed's policy decision, due ahead of Brazil's verdict on Wednesday. The Fed has had interest rates pinned near zero for the past year, and has promised to keep them there until the economy reaches full employment, and inflation has hit a sustained 2%. nL1N2L82OT

The dollar steadied as investors awaited the Fed's signal to make further investment choices. Riskier currencies such as those of emerging markets thrive on U.S. interest rates remaining low as they benefit from the interest rate differential that increases their appeal for carry trade.

"A weaker U.S. dollar and synchronized global growth are positives for emerging markets, and an on-hold Fed helps too," strategists at ING wrote in a note.

Main stock indexes in Latam were mixed by afternoon trading, compared with a 0.6% rise for a broader index of EM stocks .MSCIEF.

"We still expect EM equities to benefit from a global cyclical upswing, supported by a stable U.S. dollar," said Jean Boivin at BlackRock, adding the asset manager was overweight on emerging equities and had used recent dips to add to its exposure.

"The commodity price rally should also help resource-rich EM economies, in our view."

Peru's sol PEN= lagged peers, inching lower.

The country's populist presidential front-runner Yonhy Lescano plans to renegotiate a fairer distribution of mining wealth if elected to lead the world's No. 2 copper producer, and also allow imports of cheaper natural gas, he told Reuters less than a month before the April ballot.

In Argentina, Economy Minister Martin Guzman said the depreciation of the Argentine peso ARS=RASL will slow over the months ahead, leading to a slowdown in inflation. Meanwhile, the government said Argentina's industrial output should grow more than 6% this year versus 2020. nL1N2LD2Y7nL1N2LD2Y7

The peso's official rate has fallen about 8% so far this year.


Key Latin American stock indexes and currencies at 1931 GMT:


Stock

indexes

Latest

Daily % change

MSCI Emerging Markets

.MSCIEF

1349.21

0.67

MSCI LatAm

.MILA00000PUS

2301.37

0.26

Brazil Bovespa .BVSP

113807.62

-0.91

Mexico IPC .MXX

48124.68

0.74

Chile IPSA .SPIPSA

4905.33

-0.17

Argentina MerVal .MERV

49579.82

-1.741

Colombia COLCAP .COLCAP

1354.26

-0.2




Currencies

Latest

Daily % change

Brazil real BRBY

5.6098

0.50

Mexico peso MXN=D2

20.5808

0.24

Chile peso CLP=CL

726.6

-0.54

Colombia peso

COP=

3557.75

-0.11

Peru sol PEN=PE

3.6997

0.08

Argentina peso (interbank)

ARS=RASL

91.1300

-0.07

Argentina peso (parallel)

ARSB=

141

3.55



(Reporting by Susan Mathew and Shreyashi Sanyal in Bengaluru
Editing by Mark Heinrich and Lisa Shumaker)

((Shreyashi.Sanyal@thomsonreuters.com; +1 646 223 8780; +91 961 144 3740; Twitter: https://twitter.com/s_shreyashi;))