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China's economy gathers speed in Q1, boosts prices of
copper
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Brazil fiscal framework proposal expected in Congress on Tuesday
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Mexican economy likely up 3.8% y/y in March
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 ahead of the government's proposal for a new fiscal framework to Congress.
Chile's peso firmed about 1%, rising for the first time in three days, while the Peruvian sol gained 0.5% against the dollar. Both 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 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 0.6% as investors cautiously awaited President Luiz Inacio Lula da Silva's government's proposal for a new fiscal framework.
Institutional Relations Minister Alexandre Padilha said he would not set a precise timeframe for the framework to be voted on by the lower house and Senate, but added the Lula administration hopes that would happen "as soon as possible". "The market has been really focused on that fiscal bill and everyone wants to know how responsible are we going to be with deficits going forward, and there's a fear that won't be the case," said Edward Moya, senior market analyst at Oanda. "Going forward, foreign investment is going to pay extra close attention (to the fiscal framework), for a lot of investors this is an important moment in deciding the confidence in investing in Brazil." Mexico's peso fell 0.3% and Colombia's dropped 0.6%, 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.
Among other emerging markets, bankers said interest rates in Turkey are rising amid expectations that government policies will become more orthodox no matter who wins May 14 elections, and after a regulatory change to make holding Turkish lira more attractive to counter FX demand. The lira dipped 0.2%.
Key Latin American stock indexes and currencies at 1442 GMT:
Stock indexes Latest Daily
%
change
MSCI Emerging Markets 1000.74 -0.3
MSCI LatAm 2290.01 -0.03
Brazil Bovespa 106026.1 0.01
0
Mexico IPC 54883.63 0.19
Chile IPSA 5466.06 -0.07
Argentina MerVal 285375.8 1.451
1
Colombia COLCAP 1260.01 0.22
Currencies Latest Daily
%
change
Brazil real 4.9755 -0.78
Mexico peso 18.0802 -0.38
Chile peso 792.7 0.77
Colombia peso 4472.27 -0.78
Peru sol 3.773 -0.01
Argentina peso (interbank) 216.8200 -0.20
Argentina peso (parallel) 406 0.49
(Reporting by Shreyashi Sanyal and Shashwat Chauhan in
Bengaluru; Editing by Emelia Sithole-Matarise)
