*
Foreigners pour $31 billion into EM portfolios in Aug, IIF
says
*
Mexico's sweeping judicial overhaul formally takes effect
*
Peru economy expands for fourth straight month in July
*
Argentina's Milei pledges to protect fiscal balance in
budget
speech
*
Latam FX and stocks add 0.5%
(Updated at 3:20 p.m ET/ 1920 GMT)
By Ankika Biswas and Shashwat Chauhan
Sept 16 (Reuters) -
Most Latin American currencies ticked up against the dollar
on Monday as global markets awaited the U.S. Federal Reserve's
rate verdict later this week, with bets tilted toward an
outsized rate cut.
MSCI's Latam currencies index was up 0.5%,
hitting a three-week high, with the broader emerging markets
currencies gauge scaling a lifetime high. The
regional stocks index also climbed 0.5%.
Both Latam indexes had logged weekly gains on Friday, as
expectations grew that the Fed could opt for a bigger
50-basis-point cut when it meets on Sept. 17-18.
Lower U.S. rates could give EM central banks more room for
manoeuvre to ease and support domestic growth, barring the
volatility and uncertainty around November's U.S. presidential
election. Latin American countries are some of the major EMs
that have already started a rate-cut cycle before the Fed.
Brazil's real strengthened 0.9% against the dollar to
a near three-week high, with investors awaiting a likely local
rate hike and inflation data later in the week.
"In the last few weeks, inflation expectations have been
continuously worsening among investors," StoneX analysts noted.
"Such a scenario of discomfort will likely result in a
0.25 pp (percentage point) increase in the Selic rate, which, in
turn, should improve the outlook for the Brazilian interest rate
differential compared to other economies."
Mexico's peso slipped 0.4%, set to snap a three-day
winning streak. The local equity market was closed on account of
Independence Day.
Mexico's judicial reform overhauling the country's courts,
which will allow voters to elect judges, officially took effect
on Sunday.
Chile's peso rose 0.5% against the dollar, boosted by
strong copper prices, while Colombia's peso dropped 1.2%.
Peru's sol edged up 0.1%. Data showed Peru's economy
expanded for the fourth month in a row in July fueled by all
sectors except agriculture, continuing the country's recovery
following a recession last year.
In Argentina, President Javier Milei said during a
presentation to Congress on Sunday on the 2025 budget that he
would defend his government's commitment to maintaining fiscal
balance and veto all bills that threaten it.
Meanwhile, data from a banking trade group showed foreign
investors ploughed a net $30.9 billion into EM stocks and debt
portfolios in August.
HIGHLIGHTS
**
Petrobras' new strategic plan to have greater focus on oil
and gas, CFO says
** Israel shekel and shares slide on talk, denied by PM,
that Netanyahu may sack defence minister
Key Latin American stock indexes and currencies:
MSCI Emerging Markets 1086.56 0.39
MSCI LatAm 2260.23 0.51
Brazil Bovespa 134974.23 0.07
Mexico IPC 52016.85 0.03
Chile IPSA 6349.18 -0.03
Argentina Merval 1822577.2 0.266
1
Colombia COLCAP 1317.83 0.47
Brazil real 5.5125 0.93
Mexico peso 19.2635 -0.4
Chile peso 921.4 0.5
Colombia peso 4234.21 -1.19
Peru sol 3.7673 0.12
Argentina peso (interbank) 960 -0.052083333
Argentina peso (parallel) 1255 0.796812749
(Reporting by Ankika Biswas and Shashwat Chauhan in Bengaluru;
Editing by Ken Ferris)
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