EMERGING MARKETS-Latam FX gains, Mexican peso approaches pre-pandemic levels

    * Mexican peso leads gains
    * Brazil's real rises on speculation over local reforms
    * Rising copper prices help Chile's peso

 (Adds details, updates prices)
    By Susan Mathew and Ambar Warrick
    Sept 9 (Reuters) - Mexico's peso hit a six-month high on
Wednesday after the government unveiled a lean 2021 budget,
while other Latin American currencies recovered from recent
losses after a U.S. technology stock rout appeared to have
stabilized.
     Mexico's peso jumped about 1.5% to its highest since
early-March after the government unveiled a 2021 budget with
limited infrastructure spending and tight debt targets.

    Data showed Mexican consumer price inflation in August rose
above the central bank's target of 3%, owing to low interest
rates in the country after an easing cycle that began last year.

    "The data might reinforce Bank of Mexico's increasingly
cautious stance, but we still expect further monetary easing,
including a 25 basis point cut at its meeting later this month,"
said William Jackson, chief emerging markets economist at
Capital Economics.
    Similar data from Brazil showed inflation hit its highest in
four years last month, although the pace slowed from July and
overall inflation remained well below the central bank's goal.

    The real currency rose more than 1% as markets
watched for progress in the country's administrative reform
proposals, which are expected to generate at least 300 billion
reais ($57 billion) of savings over the next decade.

    "They'll push the limits of what can be done within the
current framework but won't break it. My sense is that they
understand the risks of doing so well, even in Congress," Daniel
Kerner, Eurasia Group managing director of Latin America told
the Reuters Global Markets Forum on Tuesday.
    As oil prices rose, crude exporter Colombia's currency
 broke a four-session losing run, while Chile's peso
 tracked a rise in copper prices.   
    Barring a few outperformers, regional currencies still have
a long road to pre-pandemic levels, as uncertainty over the
virus' economic impact persists. 
    Latin American stocks rose as Wall Street recovered from a
technology-related rout. Brazil's Bovespa rose 0.8%,
while Colombia's COCLAP was set for its best session
in more than a week.
    MSCI's index of Latam stocks jumped 2.3%.
    A Vontobel Asset Management survey of 300 institutional
investors and discretionary wealth managers showed that a
majority of investors are planning to increase their emerging
markets exposure over the next five years, even as concerns over
the impact of the COVID-19 pandemic are limiting the short-term
flow of investments to those economies.
    
    
    Key Latin American stock indexes and currencies:
    
    Stock indexes             Latest      Daily % change
 MSCI Emerging Markets         1086.71                -0.07
                                        
 MSCI LatAm                    2009.56                 2.27
                                        
 Brazil Bovespa              100871.98                 0.82
                                        
 Mexico IPC                   36237.52                 0.46
                                        
 Chile IPSA                    3782.13                -1.15
                                        
 Argentina MerVal             46295.23                1.789
                                        
 Colombia COLCAP               1242.66                 0.84
                                        
                                                           
       Currencies             Latest      Daily % change
 Brazil real                    5.2893                 1.43
                                        
 Mexico peso                   21.4255                 1.56
                                        
 Chile peso                      766.2                 0.80
                                        
 Colombia peso                 3712.77                 0.65
 Peru sol                       3.5368                 0.11
                                        
 Argentina peso                74.7600                -0.07
 (interbank)                            
                                        
 
    
 (Reporting by Susan Mathew and graphic by Aaron Saldanha in
Bengaluru; Additional reporting by Lisa Puline Mattackal;
Editing by Aurora Ellis)
  

Source: Read Full Article