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EMERGING MARKETS-Latam currencies firm, Brazil’s real gains after inflation data

The Brazilian real rose for the second straight session on Wednesday as inflation data signaled a stable post-pandemic economic recovery, while other major Latin American currencies strengthened against the dollar. The real firmed 0.4% after data showed factory gate inflation rose at its fastest pace in July, driven by increasing food costs and the price of oil and biofuels products. "The rebound in economic growth could help stabilize and potentially move the real higher," said Ed Egilinsky, head of alternative investments at Direxion. Egilinsky said the ability of the central bank to continue to act as a potential backstop for the currency, along with the government's decision on more fiscal stimulus beyond 2020 will play a major role in the behavior of the real. Brazil's President Jair Bolsonaro on Tuesday extended payments for low-income Brazilians until the end of 2020, hit by the economic fallout from the COVID-19 pandemic, a program that has created tension with his finance team. A selloff in Brazil's currency has eased recently amid stronger-than-expected macroeconomic data, including record growth in manufacturing activity last month. Central bank chief Roberto Campos Neto said on Wednesday Latin America's biggest economy was on course to shrink by about 5% this year and grow by 4% or more in 2021, stressing the importance of the government resuming its agenda of strict fiscal discipline. Chile's peso firmed by midday, a day after the country's central bank softened its prediction for an economic contraction in 2020 in the world's top copper producer. Chile's currency has bounced about 14% from its March lows to trade near its January high of 749.93 to the dollar. By contrast, the Mexican peso is still about 15% below its own pre-pandemic highs. On Wednesday, it eased another 0.2%, with President Andres Manuel Lopez Obrador saying the 2021 budget will call for spending on priority infrastructure and will not raise taxes. The finance ministry is due to present the new budget next week. A basket of Latin American equities fell 0.7%, with declines led by bourses in Brazil and Argentina. The Colombian stock index bucked the trend to gain about 0.3%. In other emerging markets, the Russian rouble slid 1.8% after German Chancellor Angela Merkel said Kremlin critic Alexei Navalny was the victim of a murder attempt with the Novichok nerve agent and that Russia must answer "difficult questions". Key Latin American stock indexes and currencies at 1922 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1117.97 -0.18 MSCI LatAm 2003.00 -0.7 Brazil Bovespa 101240.44 -0.91 Mexico IPC 37110.90 -1.01 Chile IPSA 3815.17 1.66 Argentina MerVal 44996.03 -3.329 Colombia COLCAP 1258.93 0.25 Currencies Latest Daily % change Brazil real 5.3620 0.42 Mexico peso 21.7750 0.07 Chile peso 770.8 0.05 Colombia peso 3656 0.37 Peru sol 3.5348 -0.23 Argentina peso (interbank) 74.3100 -0.08 Argentina peso (parallel) 130 2.31 (Reporting by Shreyashi Sanyal and Sagarika Jaisinghani in Bengaluru; Editing by Lisa Shumaker and Marguerita Choy) Our Standards:The Thomson Reuters Trust Principles.0 : 0narrow-browser-and-phonemedium-browser-and-portrait-tabletlandscape-tabletmedium-wide-browserwide-browser-and-largermedium-browser-and-landscape-tabletmedium-wide-browser-and-largerabove-phoneportrait-tablet-and-aboveabove-portrait-tabletlandscape-tablet-and-abovelandscape-tablet-and-medium-wide-browserportrait-tablet-and-belowlandscape-tablet-and-belowAppsNewslettersAdvertise with UsAdvertising GuidelinesCookiesTerms of UsePrivacyDo Not Sell My Personal InformationAll quotes delayed a minimum of 15 minutes. 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* Dollar firms as U.S. data signals improving economyn * Latam equities slide after best day in three monthsn * Chilean peso, Mexican peso among biggest FX declinersnn (Recasts throughout, adds comments)n By Shreyashi Sanyaln Sept 2

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