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Mexico president might avoid Trump tariffs
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MSCI EM stocks index set for best day since October
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MSCI Latam FX up 1.04%, stocks gain 1.4%
(Updates to mid-session trading)
By Purvi Agarwal and Pranav Kashyap
Jan 14 (Reuters) -
An index tracking Latin American currencies touched a
one-month high on Tuesday, as U.S. Treasury yields and eased and
the dollar stabilized, while investors remained focused on the
Federal Reserve's potential rate cuts and the prospects of
aggressive U.S. tariffs.
The MSCI index for Latin American currencies
had climbed 1% touching its highest since Dec.
13 and setting its sights on its best daily performance in
nearly a month.
Meanwhile, the index for regional stocks
advanced by 1.4%, on course for its best day in over a week.
The U.S. dollar slipped 0.2%.
In Argentina, a
report
showed its monthly inflation rate stood at 2.7% in
December, in line with analyst estimates. It's inflation in the
12 months through December was 117.8%. The Merval stock exchange
rose by 4%.
MSCI's index for overall EM stocks surged 1.4%,
heading for its strongest day since October.
The retreat in Treasury bond yields and the dollar's
steadiness came on the heels of a report suggesting Trump's team
might gradually increase tariffs to prevent inflation surges. A
cooler-than-expected U.S.
producer prices report
also contributed to the calmer market mood.
Latin American assets have been under strain since Donald
Trump's reelection in November, with fears of tariffs and
inflation driving the dollar higher.
In the latest tariff-related development, Trump announced
plans to establish a new department, the External Revenue
Service, "to collect tariffs, duties, and all revenue" from
foreign sources.
The pressure on Latin American assets intensified, with
central banks stepping into foreign exchange markets to
stabilize their currencies, following Trump's pledge to impose
hefty tariffs on the U.S.'s top trading partners - Canada,
Mexico, and China.
This included a proposed 25% tariff on imports from
Canada and Mexico, aimed at curbing drugs and migrant flows
across borders.
"Mexico is better positioned to negotiate with Trump,"
said Jason Tuvey, deputy chief emerging markets economist at
Capital Economics.
"Mexico's economic ties to the U.S. are now even larger
and so it may be able to lobby harder against the imposition of
tariffs,".
Mexican president Claudia Sheinbaum's intensified actions on
immigration and tariffs have left open the possibility the
impacts could be less severe than anticipated.
The Mexican peso strengthened 0.61% on the day, while
its stock exchange was up 0.38%.
In Brazil, the real appreciated by 0.8% against the
dollar, while the Bovespa index rose 0.24%.
U.S. consumer price data, due Wednesday, will be the next
major data release that could direct the near-term path for EM
assets.
Most other LatAm currencies saw slight gains against the
greenback. The main stock index in Colombia was down
0.5% while Chile's was up 1%.
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Key Latin American stock indexes and currencies:
Stock
indexes Latest Daily % change
MSCI Emerging Markets 1054.16 1.45
MSCI LatAm 1891.99 1.39
Brazil Bovespa 119294.79 0.24
Mexico IPC 50020.47 0.38
Chile IPSA 6822.38 0.98
Argentina MerVal 2762075.01 4.03
Colombia COLCAP 1399.51 -0.52
Currencies Latest Daily % change
Brazil real 6.0459 0.8
Mexico peso 20.525 0.61
Chile peso 1003.25 0.22
Colombia peso 4282 0.43
Peru sol 3.772 0.19
Argentina peso 1,040.0 0.00
(interbank)
Argentina peso 1,220.0 2.4
(parallel)
(Reporting by Purvi Agarwal and Lisa Mattackal in Bengaluru
Editing by Nick Zieminski)
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