July 10, 2018 / 3:34 PM / 3 months ago

EMERGING MARKETS-LatAm currencies rise as traders shrug off trade fears

    SAO PAULO, July 10 (Reuters) - Major currencies across Latin
America strengthened on Tuesday as traders were encouraged by
signs that U.S.-China trade tensions have yet to affect global
GDP, while in Mexico traders kept buying back into the peso
following an election-related sell-off.
    On Friday, the United States and China slapped duties on $34
billion worth of each other's imports, and on Tuesday China said
it would raise tariff rates for some U.S. optical fiber
products.
    But in Latin America, as in the United States to a
significant extent, traders have shrugged off the dispute and
have in fact been heartened by a relative lack of measurable
impacts stemming from the trade tit-for-tat.
    That attitude helped drive up Brazil's real currency, even
in the face of domestic political uncertainty. 
    On Sunday, a judge had ordered that imprisoned former
President Luiz Inacio Lula da Silva be freed from jail in order
to campaign for this year's election, a development that spooked
traders wary of his interventionist policies. However, that
decision was overturned later in the day by a higher-ranking
judge.
    "The Lula issue ended up not affecting the market because
the trade crisis cooled off, and the international outlook
brought some relief, compensating for judicial uncertainty,"
said Paulo Celso Nepomuceno, fixed income strategist at
Coinvalores.
    The Brazilian real rose 0.77 percent against the
dollar in late morning trade. 
    In Mexico, the peso currency rose some 0.89 percent
to 19.05 pesos to the dollar for similar reasons. The peso has
also been supported in recent days by traders buying back in
after anxiety about the recent election of President-Elect
Andres Manuel Lopez Obrador had weakened the currency.
    "The analysts believe the medium-term target (for the peso)
is closer to 18.50 than 19.50," said one Mexico City trader.
    In equities markets, Argentina's benchmark Merval index
 climbed over 2 percent on Tuesday, as the stabilization
of the Argentine peso and positive June data have spurred local
optimism.
    Brazil's benchmark Bovespa was modestly in the
black, aided by major petrochemical firm Braskem SA,
whose shares rose some 8.9 percent by late morning, after
newspaper Valor Economico reported that controlling shareholder
Odebrecht SA is set to sell its stake by October.
    
Key Latin American stock indexes and currencies at 1458 GMT:
    
 Stock indexes                           daily %     YTD %
                             Latest       change    change
 MSCI Emerging Markets         1076.82       0.1     -7.14
                                                  
 MSCI LatAm                    2563.27      0.42     -9.75
                                                  
 Brazil Bovespa               75137.83      0.17     -1.65
                                                  
 Mexico IPC                   49125.23     -0.22     -0.46
                                                  
 Chile IPSA                    5313.15     -0.23     -4.52
                                                  
 Chile IGPA                   26910.85      -0.2     -3.82
                                                  
 Argentina MerVal             28120.01      1.84     -6.47
                                                  
 Colombia IGBC                12355.81      0.01      8.66
                                                  
 Venezuela IBC               102850.60    -14.05   8042.45
                                                  
                                                          
 Currencies                              daily %     YTD %
                                          change    change
                                Latest            
 Brazil real                    3.8380      0.77    -13.67
                                                  
 Mexico peso                   19.0500      0.89      3.41
                                                  
 Chile peso                     651.36     -0.27     -5.64
                                                  
 Colombia peso                 2872.29      0.28      3.82
 Peru sol                        3.271      0.15     -1.04
                                                  
 Argentina peso                27.7200      0.83    -32.90
 (interbank)                                      
                                                  
 Argentina peso                   28.7      0.70    -33.00
 (parallel)                                       
                                                  
 

 (Reporting by Gram Slattery; additional reporting by Camila
Moreira in Sao Paulo and Miguel Angel Gutiérrez in Mexico City;
editing by Jonathan Oatis)
  
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