EMERGING MARKETS-Brazil’s real rises 1% on commodities boost, cenbank tightening hopes
* Brazil's central bank seen hiking rates on Wednesday
* Higher oil prices support Colombia's peso
(Updates prices)
By Susan Mathew
Dec 7 (Reuters) - Brazil's real jumped 1.2% to lead gains
across Latin American currencies on Tuesday as
liquidity-boosting measures by China helped support sentiment,
while the Brazilian central bank is seen hiking rates yet again
on Wednesday.
A measure of inflation showed prices cooled in Brazil in
November, but it was not seen dissuading the central bank from
raising the key interest rate by 150 bps to 9.25%, taking this
year's hikes to 725 basis points.
"Markets are well-priced for this outcome, but likely expect
a continued tone of hawkishness from Brazil's central bank,"
said Sacha Tihanyi, head of EM strategy at TD Securities.
"BRL is benefiting from substantially increased yield,
though not enough currently to make an argument for bullishness
outright, or to overcome the fiscal and political challenges
facing Brazil."
A similar story is seen playing out in Chile next week. Data
showed inflation rose slightly more than expected last month,
keeping the monetary policy committee on track to deliver an
aggressive monetary tightening by 125bps to 4.00%, according to
economists at Capital Economics.
Central banks across several emerging markets have hiked
interest rates this year to help curb rising inflation pressures
brought about by soaring energy costs and supply-side problems.
Assets of resource-rich Latam also benefited from rising
copper and iron ore prices after the Chinese central bank's
decision to cut bank reserve requirements supported metal prices
on hopes that economic activity in China would pick up.
China is among the top metal consumers in the world, and
improving economic conditions there point toward more demand for
commodity exports from Latam.
Oil exporter Colombia's peso added 0.6% as crude
prices extended a rebound as concerns over the impact of the
Omicron coronavirus variant on global fuel demand eased.
Latam oil majors Ecopetrol and Petrobras
rose more than 1% each.
A Brazilian Senate committee approved a bill that would
establish a fuel price stabilization fund aimed at bringing down
pump prices, to be financed by a new tax on crude oil exports.
Brazil steelmaker CSN rose 2% after announcing a
buyback program of up to 30 million shares.
Colombian shares underperformed as conglomerate
Grupo Argos slumped more than 5%, extending losses
after it ruled out participating in a public acquisition offer
for food producer Nutresa launched by Grupo Gilinski.
Key Latin American stock indexes and currencies:
Stock indexes Latest Daily %
change
MSCI Emerging Markets 1236.14 1.83
MSCI LatAm 2118.51 1.47
Brazil Bovespa 107672.41 0.76
Mexico IPC 50817.87 0.42
Chile IPSA 4394.86 0.6
Argentina MerVal 89474.78 1.345
Colombia COLCAP 1421.70 -0.63
Currencies Latest Daily %
change
Brazil real 5.6264 1.16
Mexico peso 21.0373 0.81
Chile peso 838.4 0.95
Colombia peso 3907.58 0.55
Peru sol 4.0674 0.25
Argentina peso 101.4100 -0.11
(interbank)
(Reporting by Shashank Nayar, Ambar Warrick and Susan Mathew in
Bengaluru;
Editing by Paul Simao and Dan Grebler)
Read More: EMERGING MARKETS-Brazil’s real rises 1% on commodities boost, cenbank tightening hopes