EMERGING MARKETS-LatAm currencies pressured by dollar rally after turbulent week
By Medha Singh Sept 25 (Reuters) - A strong dollar pressured most Latin American currencies on Friday, as investors averted risky bets at the end of a turbulent week on global equity markets and attention turned to Colombia's impending monetary policy decision. Brazil's real led declines with a 1% drop as investors preferred the safety of the greenback in the face of rising risks to the global economic recovery and political uncertainty tied to the Nov. 3 U.S. presidential election. An impasse in the U.S. Congress over another relief package to battle the economic fallout of the coronavirus crisis also weighed. MSCI's index of developing world stocks and currencies were on pace for their biggest weekly slump since the coronavirus-led crash in March. "Brazil seems better positioned than Mexico for the recovery in labor markets," Morgan Stanley economists wrote in a note, adding that soft forward-looking indicators continue to point to Brazil's economy outperforming in the future. Brazil's central bank has lifted its GDP outlook for South America's largest economy as the COVID-19 epidemic there is expected to enter a less acute phase in the fourth quarter. A drop in oil prices pressured energy exporters, with the Mexican peso shedding 1.2% and Colombia's peso hovering near a four-month low. Markets were split over whether Colombia's central bank will continue a cycle of interest rate cuts meant to boost the coronavirus-battered economy or pause after months of reductions. The decision is due to be announced around 4 p.m. EDT (2000 GMT). The battered Argentine peso weakened further after hitting a series of record lows. FTSE Russell downgraded Argentina's stock market to "unclassified" from "frontier market" as the country tightened access to foreign currency. Argentine companies are also facing an increasingly difficult task to keep up with payments on dollar-denominated debt, hiking the risk of a wave of corporate defaults amid capital controls. Chile's peso retreated to a one-month low, tracking a drop in the price of copper, the country's top export. Stocks in Chile were provided a bright spot, rising 0.3% while those in Mexico, Brazil and Colombia dropped in the range of 0.7% and 1.3%. Key Latin American stock indexes and currencies at 1441 GMT: Stock indexes daily % change Latest MSCI Emerging Markets 1055.58 -0.2 MSCI LatAm 1832.73 -0.64 Brazil Bovespa 96138.28 -0.9 Mexico IPC 36061.10 -0.43 Chile IPSA 3579.50 0.23 Argentina MerVal 41643.77 -0.554 Colombia IGBC 1178.18 -0.2 Currencies daily % change Latest Brazil real 5.5724 -1.08 Mexico peso 22.4355 -1.29 Chile peso 788 -0.48 Colombia peso 3857.95 -0.85 Peru sol 3.59 0.00 Argentina peso (interbank) 75.8400 -0.08 (Reporting by Medha Singh in Bengaluru Editing by Paul Simao)
