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Brazil's industrial output down for third month in a row
*
Latam FX down 1.2%, real off nearly 2%
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Colombian peso down for third straight day
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Brazil's Bovespa falls, Latam stocks down 2%
(Updates prices, adds comments)
By Bansari Mayur Kamdar and Shreyashi Sanyal
April 19 (Reuters) - Brazil's real led losses among
Latin American peers on Wednesday after industrial production
fell and worries crept in about the government's new fiscal
framework, while oil exporter Colombia's peso dropped tracking a
slide in crude prices.
The MSCI's index for resource-rich Latin America's currencies weakened 1.3%, with the real down nearly 2% to 5% to the dollar. It eyed its worst day since early February.
Data showed industrial production fell in February, for the third straight month, with the sector still below pre-pandemic levels. "Tight financial conditions and slowing domestic demand are fully offsetting the positive news coming from gradually falling raw material costs, and improving supply conditions," said Andres Abadia, chief Latam economist at Pantheon Macroeconomics. Markets also digested president Luiz Inacio Lula da Silva's government formally sent to Congress a proposed
fiscal framework
to control the trajectory of the public debt on Tuesday,
aimed at replacing the more rigid current spending cap.
"Lula was promising that we should have another fiscal framework in place replacing this fiscal anchor and now that the market was trying to withstand what this means, we'll potentially have higher expenditure, but how can we fund this?" said Mauricio Une, head of South America macro strategy at Rabobank.
The dollar index rose and oil prices slipped over 2% on rising scepticism about U.S. rate cuts later this year. Colombia's peso declined about 1%, falling for the third straight session.
The Latin American stocks index shed 2.7%, with Brazil's 2.1% fall leading regional losses. Vale SA fell 3% on reporting a 17.4% fall in the first quarter's iron ore output compared with the previous quarter. Weak iron ore futures after another price warning from China's state planner also weighed on the miner.
Currencies of the world's top two copper producers Chile and Peru reversed earlier declines, while the Mexican peso was flat. Elsewhere in emerging markets, the Hungarian forint dropped 2.3% against the euro after central bank deputy governor Barnabas Virag said the National Bank of Hungary (NBH) could decide to narrow its interest rate corridor next week. India is poised to overtake China as the world's most populous nation, with almost 3 million more people than its neighbour by the middle of this year, United Nations data showed.
Key Latin American stock indexes and currencies at 2026 GMT;
Stock indexes Latest Daily
%
change
MSCI Emerging Markets 990.37 -1.02
MSCI LatAm 2238.10 -2.19
Brazil Bovespa 103912.3 -2.12
1
Mexico IPC 54308.51 -0.14
Chile IPSA 5422.31 -0.96
Argentina MerVal 275405.8 -3.128
8
Colombia COLCAP 1247.97 -0.57
Currencies Latest Daily
%
change
Brazil real 5.0796 0.12
Mexico peso 18.0498 0.01
Chile peso 794 0.06
Colombia peso 4524.82 -0.88
Peru sol 3.7624 0.07
Argentina peso (interbank) 217.4600 -0.24
Argentina peso (parallel) 419 -0.24
(Reporting by Bansari Mayur Kamdar, Shreyashi Sanyal and
Shashwat Chauhan in Bengaluru; editing by Barbara Lewis and
Marguerita Choy)
