Brazil's real rose on Friday and was set
to outperform its Latin American peers for the week amid some
improving economic readings, with most other regional risk
assets also set for weekly gains.
The real rose 0.4%, and was set to add nearly 4% for
the week. Inflation in Brazil rose in July at its fastest pace
in six months thanks to rising transport and fuel costs, but at
a far slower rate than economists had expected.
Still, the reading indicated that economic activity was
picking up after the scaling back of coronavirus-driven
lockdowns, a trend that has been reflected across the rest of
Latin America as well.
The real has recovered sharply from record-low levels hit in
May, thanks to sustained intervention from the central bank. But
local central bank officials have expressed concerns over being
able to manage heightened volatility in the currency, due to the
Bets on a COVID-19 vaccine had driven risk appetite through
the week. However, an escalation in Sino-U.S. tensions appeared
to be spurring risk-off, going into next week.
China ordered the United States to close its consulate in
the city of Chengdu, responding to a U.S. demand this week that
China close its Houston consulate.
The move saw global equities retreating, with regional
equities also falling in tandem. Still, most bourses were set
for weekly gains, with Argentine stocks set to
outperform their peers.
Argentina's 1.7 trillion pesos ($23.7 billion) of short-term
'Leliq' notes have helped mop up liquidity in the market and
hold back rising prices, leaving the central bank with a tricky
task to rein in the debt without reigniting inflation.
Mexico's peso rose to the dollar. Data showed the
country's economy shrank another 2.6% in May from April after a
record decline the previous month.
"Although the economy will probably start to improve in the
second half of the year given the easing of restrictions in some
states, a slow and complex recovery is expected due to a severe
drop in investment spending," analysts wrote in a UBS client
Bolivia's general election will be pushed back until Oct. 18
due to the coronavirus pandemic, which could fan tensions
between the interim conservative government and the socialist
party of former President Evo Morales.
Key Latin American stock indexes and currencies:
Stock indexes Latest Daily % change
MSCI Emerging Markets 1059.95 -1.64
MSCI LatAm 2057.64 -0.48
Brazil Bovespa 102188.31 -0.1
Mexico IPC 37254.26 -0.48
Chile IPSA 4021.32 0.93
Argentina MerVal 48177.85 -0.476
Colombia COLCAP 1177.90 -0.33
Currencies Latest Daily % change
Brazil real 5.1909 0.43
Mexico peso 22.2450 1.10
Chile peso 772.7 -0.34
Colombia peso 3685.36 -0.67
Peru sol 3.5338 -0.45
Argentina peso 71.8900 -0.07
(Reporting by Shreyashi Sanyal in Bengaluru
Editing by Marguerita Choy)' />