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Fiscal measures to be announced this week- Brazil's FM
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Sheinbaum chides top court ahead of judicial reform
decision
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Rate decisions out of Brazil, Peru due later in the week
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MSCI Latam stocks index up 1.7%, FX up 0.6%
(Updated at 3 p.m. EST)
By Johann M Cherian and Ankika Biswas
Nov 4 (Reuters) - Brazil's real was the top gainer among
Latin American currencies on Monday, with investors gearing up
for a busy week including economic data, monetary policy
decisions by central banks in the region and the U.S.
presidential election.
MSCI's index tracking currencies in the region
climbed 0.6%, with markets preparing for a
number of events out of the world's largest economy - including
a Federal Reserve monetary policy decision later this week.
Brazil's real strengthened 1.6% against the dollar,
set to snap a six-day losing streak. Finance Minister Fernando
Haddad said measures to support the fiscal framework could be
announced this week, adding that the government is in the final
stages of preparation.
The currency has lost over 16% so far this year, despite the
Brazilian central bank's recent hawkish pivot, on expectations
that the government's fiscal spending will stoke inflation and
thwart the regulator's goal of lowering price pressures.
Investors also awaited the country's central bank decision
on Wednesday. Brazilian private sector economists have increased
inflation expectations for this year and next, and raised their
interest-rate projection for the end of 2025.
Brazil's real and Colombia's peso, up 0.5%,
were also buoyed by a 3% jump in oil prices.
Mexico's peso appreciated by 0.7%. One-week implied
options volatility on the dollar versus the peso hit
its highest level since April 2020.
However, the peso is among underperformers in the region,
hurt by Republican candidate Donald Trump's rhetoric, among
other factors. He has threatened to lift tariffs on trade
partners, including a 200% surcharge on auto imports from
Mexico, and to renegotiate the USMCA free trade deal.
Trump and Democratic candidate Kamala Harris were scrambling
for an edge in the last full day before the U.S. election.
However, the winner might not be known for days.
"The risk of high volatility after the U.S. election has
heightened the discussion around Banxico's conditions to
intervene in the currency market," Citi analysts noted.
"The intervention could come in the form of currency hedges
... we will need to see more volatility now, compared to this
year's domestic elections, in the currency market before Banxico
would act on a technical level."
Meanwhile, Mexican President Claudia Sheinbaum criticized
the country's Supreme Court for overstepping its authority as it
weighs whether to deem part of a recently enacted judicial
reform unconstitutional.
The judicial reform has spooked markets and drawn criticism
from Mexico's largest trade partner, the United States.
Copper producer Chile's peso rose 0.7% after prices
of the red metal climbed to a two-week high.
However, Chile's finance minister said the country will cut
its economic growth forecast after the IMACEC economic activity
index was well below expectations for September.
Peru's sol was flat ahead of the country's
interest-rate decision on Thursday.
On the equities front, a gauge tracking regional bourses
added nearly 2%, with the main indexes of Brazil
, Argentina and Chile up over 1% each.
Key Latin American stock indexes and currencies:
Equities Latest Daily % change
MSCI Emerging Markets 1129.14 0.61
MSCI LatAm 2124.93 1.65
Brazil Bovespa 130242.29 1.66
Mexico IPC 50838.26 0.43
Chile IPSA 6630.22 1.22
Argentina Merval 1908916.6 1.545
Colombia COLCAP 1352.8 -0.42
Currencies Latest Daily % change
Brazil real 5.773 1.62
Mexico peso 20.125 0.7
Chile peso 954.17 0.69
Colombia peso 4414 0.48
Peru sol 3.772 0.03
Argentina peso (interbank) 992.5 -0.20
Argentina peso (parallel) 1150 3.48
(Reporting by Johann M Cherian and Ankika Biswas in Bengaluru
Editing by Gareth Jones and Matthew Lewis)
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