Russian rouble hits three-month low; Latam FX rises

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Russia’s rouble touched its weakest in more than three

months on Monday on heightening geopolitical risks, while

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several Latin American currencies rose, led by the Brazilian

real.

The rouble slid past 63 per dollar in Moscow

trading before recovering, as Russia fired missiles on busy

Ukrainian cities, killing civilians and knocking out power and

heat.

The escalation in geopolitical tensions comes at a time when

risk sentiment has already been dampened by data last week

showing strong U.S. job growth, bolstering the case for another

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large interest rate hike by the Federal Reserve next month.

“There are definitely risks of macroeconomic and

geopolitical nature, so the market for the time being will

remain very much tilted towards a more defensive position,,”

said Cristian Maggio, head of portfolio strategy at TD

Securities.

However, Latin America is viewed as a standout among

emerging markets given an early start to policy tightening

compared with other regions, Maggio said.

Russian stocks sank as much as 8.7% before cutting

a chunk of those losses. Gazprom plunged 16% as it

started trading ex-dividend.

Elsewhere, Hungary’s forint touched a record low

against the euro.

In Latin America, Mexico’s peso rose 0.2%.

The head of the country’s tax authority, Raquel Buenrostro,

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was named Mexico’s new economy minister on Friday, to lead

efforts to fix a major trade dispute with the United States.

Mexican President Andres Manuel Lopez Obrador touted

Buenrostro’s experience in the public sector and master’s degree

in economics.

“While it is still too early to tell what Buenrostro’s

approach will be, we think her recurrent confrontations with

large firms in the last few years… heighten some commentators’

concerns regarding her negotiation skills,” said strategists at

Citi Research.

Brazil’s real rose 0.4% after logging its best week

since late July on Friday when investors cheered a strong

showing for far-right President Jair Bolsonaro in first round

presidential elections held on Oct. 2.

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Leftist Brazilian presidential candidate Luiz Inacio Lula da

Silva has a five percentage point lead over Bolsonaro ahead of

an Oct. 30 runoff vote, according to a poll.

Lula will not maintain Brazil’s spending cap, and is looking

at two main ideas including a flexible primary surplus target,

two senior aides told Reuters.

Meanwhile, Argentina will regulate import authorizations

more closely in an effort to prevent fraud and preserve reserves

of U.S. dollars, Economy Ministry sources said on Saturday.

Key Latin American stock indexes and currencies:

Stock indexes Latest Daily % change

MSCI Emerging Markets 883.23 -1.62

MSCI LatAm 2197.79 -0.4

Brazil Bovespa 115556.91 -0.7

Mexico IPC 45561.23 -0.37

Chile IPSA 5079.68 -2

Argentina MerVal 144645.33 -1.416

Colombia COLCAP 1197.62 -0.95

Currencies Latest Daily % change

Brazil real 5.1893 0.43

Mexico peso 19.9643 0.28

Chile peso 936.9 0.00

Colombia peso 4600.15 0.30

Peru sol 3.9602 -0.38

Argentina peso 149.1700 -0.18

(interbank)

Argentina peso 273 3.30

(parallel)

(Reporting by Susan Mathew and Amruta Khandekar in Bengaluru;

Editing by Kirsten Donovan and Alistair Bell)