February 8, 2019 / 10:01 PM / 5 months ago

EMERGING MARKETS-Latam FX ends week softer as strong dollar exacts toll

 (Recasts, updates prices, adds market strategists' quotes)
    By Aaron Saldanha
    Feb 8 (Reuters) - Latin American currencies softened against
a firm dollar on Friday to clock their worst weekly performance
in more than two and a half months, while resolute Brazilian
stocks helped the MSCI Latin American equities benchmark weather
broad regional weakness on the day.
    Investors shuffled their portfolios this week, exiting some
positions in emerging market currencies as fears about slowing
global growth amid U.S.-China trade tensions prodded them to
pile into the dollar, which notched its biggest weekly gain
since August.
    Morgan Stanley strategists wrote in a note they were cutting
exposure to emerging markets and buying the safe-haven yen which
could benefit if risk appetite falls. Developing world assets
had rallied strongly on a dovish outlook from the U.S. Federal
Reserve late last month on further interest rate raises. 
    While there were more gains to be had if a broad dollar
decline occurred, the strategists wrote, "the U.S. risk outlook
and its implications for global exposures suggest a less
aggressive EM trading stance from here."
    MSCI's index of Latin American currencies
dipped 0.2 percent on Friday, to top off a weekly slide of about
1.3 percent.
    The MSCI Latin American stocks index gained
0.2 percent on the day, aided by a 1 percent rise in Brazilian
shares. For the week, however, the regional index shed about 3.4
    Gains among Sao Paulo-traded stocks were seen in
most sectors but financials and materials shares performed
particularly strongly.
    Miner Vale SA gained 3.8 percent, climbing off
Thursday's 10-month closing low. The firm has been plagued by 
uncertainty as its tries to move past a dam burst last month
that left hundreds dead.
    Brazil's real weakened 0.3 percent while the spread,
or difference in yield, of local Brazilian 10-year bonds
 over their U.S. peers hit its highest in
more than three weeks.
    Mexico's peso was little changed, while Mexican
stocks dropped with cement giant Cemex
skidding 1.6 percent, a day after its surprise fourth-quarter
loss jolted investors.        
    Argentina's peso softened about 0.2 percent, while
local stocks rose about 2 percent to recover most of the
ground they gave up during Thursday's 2.2 percent slide, which
was induced by traders booking profits.       
    Chile's peso held course, while stocks in the country
slid 0.9 percent.
    Colombia's peso was little changed, while the
country's equities benchmark fell 0.2 percent. 
    Latin American stock indexes and currencies at 2146 GMT
 Stock indexes                              daily
                                 Latest    change
 MSCI Emerging Markets            1036.03   -0.57
 MSCI LatAm                       2851.15    0.19
 Brazil Bovespa                  95343.10    0.99
 Mexico IPC                      43180.45   -1.02
 Chile IPSA                       5379.09   -0.88
 Argentina MerVal                36664.24    2.05
 Colombia IGBC                   11895.63   -0.24
 Currencies                                 daily
 Brazil real                       3.7293    0.06
 Mexico peso                      19.0835    0.03
 Chile peso                        658.15   -0.05
 Colombia peso                    3113.55    0.05
 Peru sol                           3.322    0.06
 Argentina peso (interbank)       37.8100    0.16
 (Reporting by Aaron Saldanha in Bengaluru; editing by Grant
Nuestros Estándares:Los principios Thomson Reuters
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