EMERGING MARKETS-Brazil's real rises on rate hike prospects; Latam stocks rally
By Susan Mathew July 26 (Reuters) - A weakening dollar helped an index of emerging markets cut a chunk of its losses on Monday, with Brazil's real leading gains among some Latin American currencies on the possibility of rising interest rates there. Stocks in the region also rallied, outperforming peers elsewhere that took a hit over tighter government rules in China. MSCI's index of EM currencies fell up to 0.26% on the risk-off mood, but as the dollar weakened ahead of the Federal Reserve's policy decision on Wednesday, EM currencies found footing, with South Africa's rand moving away from March lows, while Russia's rouble erased all of its losses. Brazil's real reversed early losses, rising 0.6%. A survey on Monday showed consumer confidence in Brazil rose in July to a nine-month high, a fourth consecutive increase. Meanwhile, a central bank survey showed Brazilian interest rates are expected to hit 7.00% this year as inflation rises. The benchmark Selic rate is currently at 4.25%. These positive headlines helped investors look past continued protests to impeach President Jair Bolsonaro who faces reelection next year. Increasing political uncertainty has seen the currency fall about 3% from the 2021 highs hit last month. "Although the government is already taking measures to improve its popularity/relationship with Congress, it would be important to monitor the impact of these demonstrations on the next polls," strategists at Citi said. Mexico's peso rose 0.1% as oil prices improved, but rising coronavirus cases kept a lid on gains. The total number of infections approached 3 million, with hospital occupancies in Mexico City and its suburbs increasing by a third. Investors are worried about renewed global economic fallout from a new wave of the pandemic. The United States will not lift any existing travel restrictions "at this point" due to concerns over the highly transmissible COVID-19 Delta variant and the rising number of U.S. coronavirus cases, a White House official told Reuters. Rising copper prices buoyed exporter Peru's sol, but Chile's peso extended losses to a third straight session, hitting eight-month lows as the focus slowly turns to general elections in November. Miners were among the biggest gainers across Latam bourses on Monday as copper and iron ore prices rose. Mexico's IPC index extended gains to a fifth straight session. Key Latin American stock indexes and currencies at 1420 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1284.02 -2.08 MSCI LatAm 2547.92 0.48 Brazil Bovespa 125899.35 0.68 Mexico IPC 50458.27 0.38 Chile IPSA 4200.43 0.31 Argentina MerVal - - Colombia COLCAP 1257.96 0.3 Currencies Latest Daily % change Brazil real 5.1777 0.61 Mexico peso 20.0230 0.09 Chile peso 764.5 -0.48 Colombia peso 3898.5 -0.35 Peru sol 3.913 0.31 Argentina peso 96.5200 -0.08 (interbank) (Reporting by Susan Mathew in Bengaluru Editing by Paul Simao)
