Updated at 1455 GMT
Brazil raises primary deficit forecast
Mexico’s peso leads declines in Latin America
Latin American stocks down 1%, currencies off 0.4%
Forint eases as Hungary’s central bank cuts rates
By Johann M Cherian
July 23 (Reuters) –Most currencies in resources-rich Latin America slipped on Tuesday, tracking weakness in commodities prices, while investors also focused on some fiscal austerity measures undertaken by Brazil’s President Luiz Inacio Lula da Silva.
The Mexican peso MXN= led losses with a 0.7% decline, ahead of an inflation report in the oil exporting nation later in the week, as crude prices slipped for a third consecutive session on growing expectations of a ceasefire in Gaza, which could abate worries about supply disruptions from the region. O/R
Investors also were paying attention to uncertainty around the U.S. election campaign and possible repercussions the results of the Nov. 5 presidential election could have on security, trade and immigration between the U.S. and Mexico.
Colombia’s peso COP= also weakened 0.2%, while Chile’s peso CLP= slipped 0.3%, as copper prices extended losses to hit their lowest levels in three and a half months on growing concern over demand in top consumer China. MET/L
Brazil’s real BRL= outperformed its peers and was up 0.1%. Traders took some comfort from the Brazilian government’s decision to widen its annual primary deficit forecast to 32.6 billion reais ($5.9 billion), prompting a spending freeze to meet a fiscal target aimed at broadly eliminating the primary deficit in Latin America’s largest economy.
“The government does not have revenue growth under its direct control, because a lot of that depends on growth of the economy, but what it has under its control is spending,” said Thierry Wizman, global FX and rates strategist at Macquarie.
“We got to the point where you needed a ‘mini crisis’ in the currency to prompt the politicians in Brazil to take some corrective action. It’s relevant that Lula has made these announcements, but they’re in response to a crisis, not proactive measures.”
The real is the top underperformer among major currencies in the region after fears of excessive spending and interference with central bank independence sparked a selloff towards the end of the second quarter.
MSCI’s gauge for regional bourses .MILA00000PUS slipped 1%, with Brazil’s Bovespa .BVSP down 0.5%, weighed down by a drop in commodities-linked stocks.
Vale VALE3.SA fell 1.2%. The mining giant’s copper and nickel spin-off Vale Base Metals said it has picked Shaun Usmar as its new CEO.
Telefonica Brasil VIVT4.SA lost 0.4% after the firm said its TCloud unit signed a deal to buy cloud service firms IPNET and IPNET USA for up to 230 million reais ($41.29 million).
Mexico’s main index .MXX slipped 0.6%, with Grupo Mexico GMEXICOB.MX falling 3%. The mining and transport conglomerate reported a 34% increase in second-quarter net profit.
Hungary’s forint EURHUF= weakened 0.3% against the euro after the country’s central bank lowered its key interest rate by 25 basis points to 6.75%, as expected.
Key Latin American stock indexes and currencies:
Latin American market prices from Reuters |
||
Stock indexes |
Latest |
Daily % change |
MSCI Emerging Markets .MSCIEF |
1087.40 |
0.18 |
MSCI LatAm .MILA00000PUS |
2240.97 |
-1 |
Brazil Bovespa .BVSP |
127269.54 |
-0.46 |
Mexico IPC .MXX |
53632.78 |
-0.69 |
Chile IPSA .SPIPSA |
6594.61 |
-0.09 |
Argentina MerVal .MERV |
1599168.44 |
0.551 |
Colombia COLCAP .COLCAP |
1364.17 |
-0.18 |
Currencies |
Latest |
Daily % change |
Brazil real BRBY |
5.5781 |
0.10 |
Mexico peso MXN=D2 |
18.0774 |
-0.84 |
Chile peso CLP=CL |
945.6 |
-0.52 |
Colombia peso COP= |
4005.18 |
-0.39 |
Peru sol PEN=PE |
3.7547 |
0.00 |
Argentina peso (interbank) ARS=RASL |
926.0000 |
0.00 |
Argentina peso (parallel) ARSB= |
1425 |
1.05 |
Reporting by Johann M Cherian in Bengaluru; Editing by Paul Simao