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Brazilian real and Mexican peso lead Latam FX higher with strong commodity gains

By on November 11, 2021 0

Content of the article

Brazil’s real gains among the Latins

US currencies Thursday as base material and metal

prices rose on China Evergrande cheer, while the Mexican peso

won before a central bank decision on interest rates later in

the day.

The Mexican peso rose 0.7% with the Mexican powerhouse

bank, known locally as Banxico, is preparing to raise interest rates for

the fourth consecutive time at its monetary policy meeting.

Estimates call for an increase of 25 basis points to 5%, in its

decision due at 2 p.m. ET (7 p.m. GMT).


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Data earlier this week showed Mexican inflation jumped in

October hitting a rate more than double that of the central bank

target, which reinforces the need for further rate hikes.

“If the bank increased the key rate by 50bp

instead of 25bp, we believe that the financial markets

see it as a certain acceleration of the tightening of the rhythm, ”wrote

Credit Suisse analysts in a note.

“By this route, the bank would run the risk of terminating

with an unnecessarily high terminal rate, if we consider

that this year’s inflationary shock is unlikely to persist

2022. “

Peru’s central bank is also expected to rise by 50 basis points

later Thursday at 2%. The ground was stable in front of the


The Brazilian real jumped 1.3%, supported by a rise


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iron ore and copper prices after Chinese real estate developer

Evergrande made his bond payments, raising hopes for the government

support for a real estate sector that can generate significant demand

for metals.

Bradesco analysts have also pointed out a certain level of

reduced uncertainty after Brazil’s lower house approved a

constitutional amendment allowing more spending. But the Senate

the passage is now expected.

Sao Paulo’s listed stocks jumped 2%, with the index

set for its best session in over two weeks.

Brazilian airline Azul SA, up 4.3%

despite a larger net loss in the third quarter thanks to

expenses on loans and leases.

Emerging market currencies had been hit during the previous

session after surging US inflation increased bets on rate hikes


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out there sending the dollar to 16-month highs and bond yields


The South African rand rose 1%, nearly seven weeks

highs, trying to regain Wednesday’s 2.7% drop after the US

inflation data. In its medium-term fiscal policy statement https://www.reuters.com/article/safrica-economy-budget/south-africa-cuts-deficit-forecast-sees-debt-peaking-at-lower-level-idUSJ8N2KV013 ,

South Africa cut its deficit forecast and now sees its debt

culminating at a lower level.

Rising copper prices helped Chilean main producer peso

earn 0.5%.

The Chilean economy is expected to grow by more than 11% this year amid

a rapid resumption of the impact of the coronavirus pandemic,

President Sebastián Piñera said Thursday. The forecasts,


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higher than the government’s previous estimate, also helped

support the currency.

The currency of the oil-exporting country, Colombia, lags behind

as oil prices fell to $ 82 a barrel, prolonging sharp declines

triggered by concerns about rising inflation in the United States as OPEC slashed

its oil demand forecast for 2021.

Main Latin American Stock Indices and Currencies at 14:33 GMT:

Stock market indices Last Daily%


MSCI Emerging Markets 1,280.18 0.45

MSCI Latin America 2,217.70 1.75

Brazil Bovespa 108073.87 1.99

Mexico CPI – –

Chile IPSA 4,468.39 -0.46

Argentina MerVal 96081.83 1

Colombia COLCAP 1378.58 0.95

Latest Daily Currencies%


Real Brazil 5.4268 1.38

Mexican peso 20.4921 0.63

Chilean peso 790 0.58

Colombian peso 3876.53 -0.04

Peru sol 4.0193 -0.11

Argentine peso 100.1600 -0.01


(Reporting by Shashank Nayar and Susan Mathew in Bengaluru;

Edited by Andrea Ricci)



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