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Peru may tap capital markets this year to better manage debt
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Brazil's Lula cancels trip to China
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Latam stocks up 1.0%, FX adds 0.5%
By Bansari Mayur Kamdar March 27 (Reuters) - Colombia's peso rallied over 1% as the U.S. dollar struggled for direction on Monday, leading currencies in Latin America higher for their sixth straight session as fears of a global banking crisis ebbed. Latin American markets tracked the recovery in their U.S. peers after First Citizens BancShares said that it would take the deposits and loans of failed Silicon Valley Bank , helping calm fears of banking contagion. The MSCI's index for Latam currencies gained 0.5% by 1447 GMT, while stocks added 1.0%.
"What you're seeing today is not necessarily a return to risk appetite or anything major like that, but the nature of last week's chaos did give a bad taste and reminder of what 2008 was like," said Juan Perez, director of trading at Monex. The peso rose 1.1% against a subdued dollar, with firm crude prices also supporting the currency of the oil producer. Investors focused on a decision by Colombia's central bank decision later this week where it is expected to raise interest rates by 25 basis points to 13%.
"The MPC may complement this (25 bps) move with guidance suggesting that with such a hike the policy stance becomes significantly restrictive to lay the groundwork for eventually stopping the tightening cycle, although we do not anticipate that the MPC will explicitly close the door to further hikes," said analysts at Goldman Sachs in a note. Stocks in Colombia were flat, with majority state-owned energy company Ecopetrol slipping 0.8% on naming Alberto Consuegra as its interim CEO on Friday.
Fellow oil producer Mexico's currency added 0.2% against the dollar, while the Chilean peso and the Peruvian sol gained 0.3% and 0.6%, respectively. Peru's government expressed qualified interest in tapping the international bond market later this year in a bid to better manage liabilities, said Economy Minister Alex Contreras. In Brazil, the real added 0.3% against the greenback, while stocks gained 0.8%. Brazil's President Luiz Inacio Lula da Silva canceled a trip to China due to medical reasons, and the March 27-31 visit will be rescheduled. Focus now turned to an eagerly awaited fiscal framework in Brazil, which was initially promised by Finance Minister Fernando Haddad for March, but was postponed by Lula until after the planned China trip. On the data front, Brazil posted a lower-than-expected current account deficit in February, showed central bank data, mainly due to a decrease in factor payments. Elsewhere in emerging markets, Israel's currency and stocks rallied on rising expectations that Prime Minister Benjamin Netanyahu will halt his bitterly contested plans to overhaul the judiciary as protests in Tel Aviv and Jerusalem intensified.
Key Latin American stock indexes and currencies at 1447 GMT:
Stock indexes Latest Daily %
change
MSCI Emerging Markets 964.34 -0.81 MSCI LatAm 2098.98 1.06
Brazil Bovespa 99636.55 0.82
Mexico IPC 53029.46 0.49
Chile IPSA 5259.11 0.21
Argentina MerVal 0.00 0
Colombia COLCAP 1106.37 0.01
Currencies Latest Daily %
change
Brazil real 5.2284 0.41
Mexico peso 18.3896 0.13
Chile peso 806.3 0.48
Colombia peso 4683.22 1.16
Peru sol 3.767 0.13
Argentina peso (interbank) 207.3500 -0.76 Argentina peso (parallel) 385 1.04 (Reporting by Bansari Mayur Kamdar and Shashwat Chauhan in
Bengaluru; Editing by Alison Williams)
