May 29, 2019 / 3:31 PM / 3 months ago

EMERGING MARKETS-Brazil real shines on reform hopes, Mexican peso at 3-wk low

    By Susan Mathew
    May 29 (Reuters) - Brazil's real strengthened on Wednesday
on encouraging signals that President Jair Bolsonaro will be
able to push reforms through, but most other Latin American
currencies fell as investors turned to safer plays on signs the
U.S.-China trade dispute may escalate.
    Except the real, most regional currencies were down
between 0.2% and 0.4%, as the dollar gained momentum on fears
that the trade war could further impair global growth. 
    After U.S. President Donald Trump said he is not ready to
strike a trade deal with China right away, Chinese newspapers
reported that the Asian giant could use its export of rare
earths to the United States to strike back against U.S. tariffs.
    Rare earths are chemical elements used in high-tech consumer
electronics and military equipment.
    "The latest developments continue to raise doubts that the
trade war could have a potentially serious negative impact on
the global economic dynamic," wrote analysts at CI Banco.
    Mexico's peso hit a three-week low and looked set to
extend losses to a fifth straight session. Investors will be
watching for the central bank's quarterly inflation report due
later in the day.
    The bank is expected to slightly reduce its economic growth
forecast for this year and next, said CI Banco analysts. 
    Chile's peso hit its lowest in more than three years,
with sliding copper prices adding to the country's woes.
    Meanwhile, Mexican shares erased losses to rise 0.1%,
while stocks in Chile rose nearly 1% after four
sessions of losses. Those in Colombia climbed 1.2%.
    In Brazil, stocks gave up session losses to trade
0.4% higher and touch a one-month peak, while the currency
 hit a two-week high, up 0.7%.
    Investors were cheered after Brazil's Senate on Tuesday
voted to approve Bolsonaro's decree to revamp the executive
branch, averting a potential crisis, as concerns had deepened
about the fate of an ambitious pension reform bill as it made
its way through Congress.
    Sentiment was also helped by comments overnight by Civil
Affairs Minister Onyx Lorenzoni that the government is working
on an agreement between three branches of government on targets
and projects to revive economic growth.
     
    Key Latin American stock indexes and currencies at 1456 GMT:
    Stock indexes             Latest    Daily %
                                         change
 MSCI Emerging Markets          984.52     -0.37
                                        
 MSCI LatAm                    2637.68      0.77
                                        
 Brazil Bovespa               96804.23      0.43
                                        
 Mexico IPC                   42260.39      0.12
                                        
 Chile IPSA                    4845.25      0.98
                                        
 Argentina MerVal             33769.96     -2.52
                                        
 Colombia IGBC                12015.56      1.16
                                        
                                                
       Currencies             Latest    Daily %
                                         change
 Brazil real                    3.9972      0.66
                                        
 Mexico peso                   19.2577     -0.34
                                        
 Chile peso                      709.2     -0.31
                                        
 Colombia peso                 3369.95      0.14
 Peru sol                        3.357     -0.12
                                        
 Argentina peso                44.5300      0.36
 (interbank)                            
                                        
 

 (Reporting by Susan Mathew in Bengaluru;)
  
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