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Brazil struggles as US tariff deadline looms, talks stall
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Brazil's inflation remains above central bank's target
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IMF reaches staff-level agreement for $2 billion to
Argentina
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MSCI Latam FX, stocks indexes drop
(Updates with afternoon levels)
By Purvi Agarwal, Ankita Yadav and Ragini Mathur
July 25 (Reuters) - Latin American currencies took a hit
on Friday, with Brazil's real leading the decline as investors
grew cautious ahead of impending U.S. tariffs and key central
bank decisions next week.
Despite positive trade developments earlier this week,
including the U.S. signing agreements with Japan, Indonesia and
the Philippines, along with progress on a potential EU deal,
market optimism faded ahead of the deadline for U.S. tariffs
expected to take effect next week.
Brazil's government struggled to avoid punitive 50% U.S.
tariffs, as high-level talks were stalled and U.S. companies
were reluctant to challenge President Donald Trump on the
matter, officials and industry leaders said.
Brazil's real fell 0.8% against a firmer dollar and
was set for its biggest daily drop in more than two weeks.
Eduardo Ordonez Bueso, an emerging markets debt portfolio
manager at BankInvest, said that the market reaction was not
more pronounced as investors believed Trump could eventually
reconsider his stance on Brazil.
"A lot of the Latin American companies already have some
kind of operations inside the U.S., so they're a lot more
insulated," Bueso added.
Brazil's domestic Bovespa index edged down 0.2%
after data showed inflation in mid-July remained above the
central bank's target range, bolstering expectations that
interest rates will be held steady during the bank's meeting
next week.
The broader MSCI index tracking Latam currencies
fell 0.5%, though it remained poised for its
second consecutive week of gains due to earlier strength.
Chile's peso slumped 1.4%, its sharpest daily drop
since early April, while Peru's sol shed 0.4%, both
tracking weak copper prices. U.S. tariffs on copper products are
expected to take effect on August 1.
Colombia's peso fell 1.7% and was set for its largest
one-day drop since April 7, while Mexico's peso was flat,
constrained by lower prices of oil - a top export commodity from
the countries.
A Reuters poll suggested Colombia's central bank could cut
its benchmark interest rate next week.
Argentina's peso fell 0.4%, while its stock index
surged 2.9%.
Dollar-denominated bonds in the country rose broadly after
the International Monetary Fund reached a staff-level agreement
on the first review of its extended fund facility with the
government, potentially unlocking around $2 billion in funds.
Regional equity markets showed mixed performance. Mexico's
stock index gained 0.5%, Chile's IPSA index
rose 0.8%, while Colombia's COLCAP index dipped 0.1%.
The MSCI index tracking Latin American stocks
fell 0.4% but was set to end a two-week losing
streak.
Key Latin American stock indexes and currencies:
Latin American market prices
from Reuters
Equities Latest Daily %
change
MSCI Emerging Markets 1257.03 -0.81
MSCI LatAm 2259.35 -0.41
Brazil Bovespa 133487.89 -0.24
Mexico IPC 57301.55 0.47
Chile IPSA 8205.41 0.78
Argentina Merval 2198336.32 2.27
Colombia COLCAP 1707.97 -0.1
Currencies Latest Daily %
change
Brazil real 5.5663 -0.82
Mexico peso 18.5498 -0.04
Chile peso 963.47 -1.43
Colombia peso 4139.5 -1.69
Peru sol 3.544 -0.08
Argentina peso (interbank) 1279.5 -0.43
Argentina peso (parallel) 1295 1.89
(Reporting by Ankita Yadav and Purvi Agarwal, Ragini Mathur and
Johann M Cherian in Bengaluru; Editing by Shreya Biswas and
Mohammed Safi Shamsi)
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