*
China's economy gathers speed in Q1, boosts prices of
copper
*
Brazil's government submits fiscal framework bill to
Congress
*
Mexican economy likely up 3.8% y/y in March
(Adds comments, updates prices throughout)
By Shreyashi Sanyal
April 18 (Reuters) - Currencies of copper miners Chile
and Peru rose on Tuesday after better-than-expected data from
top consumer China lifted demand hopes, while Brazil's real fell
after the government submitted its long-awaited fiscal framework
proposal to Congress.
Chile's peso firmed 0.6%, rising for the first time in three days, while the Peruvian sol gained 0.5% against the dollar. The two countries are the world's largest exporters of copper, and rely heavily on China's consumption of the red metal.
Prices of copper rose as data from China showed its economy grew at a faster-than-expected pace in the first quarter, benefiting from an end of strict COVID-19 curbs, although headwinds from a global slowdown point to a bumpy ride ahead. The U.S. dollar softened after Beijing's upbeat economic showing, although it did little to lift other Latam currencies, which were bogged down by factors specific to their regions.
Brazil's real shed 0.7%. Investors digested President Luiz Inacio Lula da Silva's government's fiscal rules which established that expenses can grow up to 70% of the increase observed in recurring revenues, aiming to provide sustainability to the trajectory of the public debt.
The framework has been closely watched by foreign investors to gauge confidence in deciding on investing in Brazil.
"The new fiscal framework sets the stage for equity
outperformance, while high interest rates support the currency
and falling inflation drives debt," Jon Harrison, managing
director of EM macro strategy at TS Lombard, wrote in a note.
Brazil's Bovespa index reversed earlier declines
to rise 0.1% by afternoon trading.
Mexico's peso fell 0.1% and Colombia's dropped 1%, as the oil exporters' currencies tracked a fall in crude prices. A preliminary reading showed Mexico's economy likely grew 3.8% in March compared with the same month a year earlier.
Latin American currencies have still outperformed other emerging markets, with the MSCI's index tracking Latam currencies jumping 10% for the year versus the broader emerging market foreign exchange index which has risen about 2%.
Central and South American economies have benefited from higher commodity prices and their exposure to China, while political uncertainties in certain regions have also calmed since the beginning of the year.
Brazil's Finance Minister Fernando Haddad announced that
the government has backtracked and will maintain the exemption
for international orders of up to US$50 between individuals.
Local retailers including Lojas Renner and
Magazine Luiza , which could have benefited from the
tax exemption's end, fell 4.1% and 2.2%, respectively.
Key Latin American stock indexes and currencies at 1941 GMT:
Stock indexes Latest Daily
%
change
MSCI Emerging Markets 1000.41 -0.34
MSCI LatAm 2285.97 -0.21
Brazil Bovespa 106094.6 0.07
9
Mexico IPC 54422.63 -0.65
Chile IPSA 5470.05 0
Argentina MerVal 285130.5 1.363
8
Colombia COLCAP 1247.04 -0.81
Currencies Latest Daily
%
change
Brazil real 4.9767 -0.80
Mexico peso 18.0400 -0.16
Chile peso 794.5 0.54
Colombia peso 4488.19 -1.13
Peru sol 3.7664 0.17
Argentina peso (interbank) 216.9300 -0.25
Argentina peso (parallel) 414 -1.45
(Reporting by Shreyashi Sanyal and Shashwat Chauhan in
Bengaluru; Editing by Emelia Sithole-Matarise and Jonathan
Oatis)
