Brazil leads Latam assets lower in thin trading

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Brazilian stocks and the real traded

lower on Monday, leading declines among regional peers as

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trading remained thin in the last week of a year in which Latin

American assets have performed better than most other emerging

markets.

Brazil’s real fell 0.6% against the dollar,

while Sao Paulo stocks shed 0.7%. The MSCI’s index for

Latam stocks shed 1.3%, but was set to rise

close to 2% in 2022.

The broader emerging market equities index is down

more than 22% for the year, with many market players pointing to

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Latin America’s heavy exposure to commodities as one of the

factors that have fueled the outperformance.

“Economies (in Latam) rebounded strongly from the Omicron

wave, surging commodity prices following Russia’s invasion of

Ukraine gave a boost to the region’s exports and economies were

more resilient to high interest rates than we’d thought,” said

Kimberley Sperrfechter, emerging markets economist at Capital

Economics.

But Sperrfechter warned of sticky inflation in the region

and tighter monetary policies, “while central banks in Latin

America are likely to be among the first to cut interest rates

next year, they will generally do so only gradually and rates

will remain in restrictive territory throughout the year.”

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Chile’s peso shed 0.1%. A poll of traders showed

Chile’s central bank is expected to keep its benchmark interest

rate at 11.25% at its January meeting, before an easing cycle

that would take rates to 6.5% within 12 months. Stocks in the

region fell 0.4%.

Mexico’s peso fell 0.2%, but Colombia’s peso

and Peru’s sol rose 0.1% and 0.3% respectively.

Trading volumes were likely to be thin through to day as

U.S. and European markets were closed on Monday for the long

Christmas holiday weekend.

In other EMs, Turkey’s lira briefly touched a record low of

18.8440 against the dollar early, bringing its losses this year

to 30%, after a period in which Ankara has followed policies

tightly controlling the exchange rate.

Key Latin American stock indexes and currencies at 1552 GMT:

Stock indexes Latest Daily %

change

MSCI Emerging Markets 956.68 0.2

MSCI LatAm 2163.09 -1.42

Brazil Bovespa 108788.58 -0.83

Mexico IPC 50611.56 0.07

Chile IPSA 5233.88 -0.41

Argentina MerVal 190627.05 1.514

Colombia COLCAP 1248.75 -0.31

Currencies Latest Daily %

change

Brazil real 5.1952 -0.59

Mexico peso 19.3800 -0.19

Chile peso 878.3 -0.01

Colombia peso 4728 0.01

Peru sol 3.8123 -0.15

Argentina peso (interbank) 175.7500 -0.52

Argentina peso (parallel) 335 1.49

(Reporting by Shreyashi Sanyal in Bengaluru; Editing by Chizu

Nomiyama)