October 17, 2019 / 2:50 PM / a month ago

EMERGING MARKETS-Dollar doldrums lift Latin American currencies

    By Susan Mathew
    Oct 17 (Reuters) - Latin American currencies rose on
Thursday, with the Mexican peso scaling a 2-1/2 month high, as a
euro rally triggered by a Brexit deal added to the dollar's
woes.
    Britain and the European Union said they had clinched a deal
for a British exit from the bloc, more than three years after
Britons voted for it in a referendum. 
    Though it still faces hurdles, including opposition from
Northern Ireland's Democratic Unionist Party (DUP), the Brexit
deal propelled the euro 0.5% higher. 
    That hit the dollar, already in the doldrums after weak U.S.
retail sales on Wednesday and manufacturing data on Thursday
dimmed outlook for the world's biggest economy and raised bets
of an interest rate cut.
    Brazil's real strengthened 0.4%, and Chile's peso
 rose 0.7%, while Mexico's peso gained 0.2%.
    Brazil's treasury secretary Mansueto Almeida told a news
channel that Brasilia's auction of oil prospecting rights may
reduce the government deficit in 2019 to below 100 billion reais
($24.1 billion).
    However, Colombia's peso dropped to a three week low
after Congress approved a 2020 government budget of 271.7
trillion pesos ($78.7 billion) on Wednesday, hours after the top
court rolled back a tax reform proposal. 
    The government now has to pass a new law. Morgan Stanley
analysts had warned risk premia would increase in Colombian
assets if the law was overturned.
    "With low approval ratings and limited time, the next few
weeks should be challenging for the current administration and
volatility in local assets will likely increase."
    "Additionally, local elections on October 27 are likely to
add further noise to any potential upcoming Congressional
debates around the law, suggesting further downside risks around
the new approval process," Morgan Stanley said.
    Regional stocks also rallied, taking MSCI's index of Latam
shares to an over two-month high, to move in
line with the broader EM index and Wall Street.
    Brazilian stocks rose to a one month high, led by
shares of homebuilder Cyrela Brazil Realty after its
quarterly operating figures beat expectations.
    The index is on course for a seventh straight session of
gains, which would be its longest winning streak since a
nine-session run in February last year.
    
    Key Latin American stock indexes and currencies at 1420 GMT:
   Stock indexes            Latest    Daily %
                                      change
 MSCI Emerging Markets       1030.20      0.6
                                      
 MSCI LatAm                  2730.65      0.8
                                      
 Brazil Bovespa            105423.33      0.2
                                      
 Mexico IPC                 43654.30     0.27
                                      
 Chile IPSA                  5167.33     0.33
                                      
 Argentina MerVal           30794.39    0.114
                                      
 Colombia IGBC              12860.27     0.08
                                      
                                             
       Currencies           Latest    Daily %
                                      change
 Brazil real                  4.1330     0.50
                                      
 Mexico peso                 19.1429     0.31
                                      
 Chile peso                   711.82     0.63
                                      
 Colombia peso               3467.02    -0.30
 Peru sol                     3.3498     0.36
                                      
 Argentina peso              58.3000     0.08
 (interbank)                          
                                      
 
 (Reporting by Susan Mathew in Bengaluru; Editing by Alexander
Smith)
  
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