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EMERGING MARKETS-Real poised for biggest qtrly drop since pandemic
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EMERGING MARKETS-Real poised for biggest qtrly drop since pandemic
Jun 28, 2024 8:42 AM

(Updated at 1457 GMT)

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Argentina passes economic reform bill

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Colombia interest rate decision on tap

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Brazil's BTG Pactual buys US-based M.Y. Safra Bank

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Latam stocks, FX off 0.1% each

By Johann M Cherian

June 28 (Reuters) - Brazil's real led declines among

Latin American currencies on Friday and was set for its biggest

quarterly drop since January 2020 as investors weighed fiscal

and political uncertainty in the region's biggest economy.

The currency depreciated over 1% and was on track for

its biggest monthly drop in nearly two years.

Latest data showed government debt as a share of gross

domestic product rose to 76.8% in May from 76.3% the month

before, while President Luiz Inacio Lula da Silva launched fresh

barbs on the central bank's monetary policy.

"There is a lot of noise in terms of politics, and the

unwillingness of the government to cut some expenses in order to

bring fiscal expenditure down in the coming years is making

investors uneasy," said Andres Abadia, chief Latam economist at

Pantheon Macroeconomics.

MSCI's index tracking Latam currencies

slipped 0.1% against the dollar and was on track for a loss of

over 5% on both a monthly and quarterly basis.

Political uncertainty following elections in Mexico, a

hawkish tilt in Brazilian monetary policy and the U.S. Federal

Reserve's delay to kick off interest rate cuts have weighed on

sentiment.

Colombia's peso appreciated 0.8% ahead of a central

bank monetary policy decision later in the day, with analysts

expecting a 50-basis point reduction.

Mexico's peso bounced 0.9% snapping a three day

losing streak.

Copper producer Chile's peso strengthened 1.2% as

prices of the red metal ticked higher. Data showed unemployment

in the country rose 8.3% in May lower expectations of 8.5%.

Yield on Argentina's dollar bond due in 2029

slipped over 14 basis points. The country's lower house approved

economic reform measures proposed by President Javier Milei,

giving him his first big legislative win just over six months

after taking office.

MSCI's index tracking Latam equities slipped

0.2%, and was on track for a monthly loss of 7% and a drop of

14% for the second quarter.

Brazil's Bovespa slipped 0.4%, with BTG Pactual

dropping 1.4% after the investment lender signed

definitive documents to buy U.S.-based lender M.Y. Safra Bank.

Petrobras added 0.4% after the state-run oil firm

elected Fernando Melgarejo as the firm's chief financial

officer.

Elsewhere, India's rupee inched up 0.1% aided by

likely passive funds buying into government bonds upon their

inclusion in the widely-tracked JPMorgan emerging market debt

index.

Abhishek Bisen, head of fixed income at Kotak Mahindra AMC

said that there is a possibility of additional inflows of $2-$5

billion over the next nine months as the south Asian nation's

debt garners attention from active fund managers as well.

Key Latin American stock indexes and currencies:

Latin American market

prices from Reuters

Stock indexes Latest Daily %

change

MSCI Emerging Markets 1086.25 0.4

MSCI LatAm 2179.74 -0.09

Brazil Bovespa 123796.13 -0.41

Mexico IPC 52372.24 0.12

Chile IPSA 6482.98 -0.33

Argentina MerVal 1619375.44 -0.996

Colombia COLCAP 1375.74 -0.07

Currencies Latest Daily %

change

Brazil real 5.5576 -0.90

Mexico peso 18.2706 0.81

Chile peso 942.9 1.08

Colombia peso 4140.12 0.76

Peru sol 3.8286 -0.23

Argentina peso 911.5000 0.00

(interbank)

Argentina peso 1325 2.26

(parallel)

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