*
Chile's economic activity down 2.1% in March vs year
earlier
*
Brazil oil-export tax a 'concerning development' -Shell
chief
*
Brazil central bank meeting eyed on Wednesday
(Adds analyst comments, updates prices throughout)
By Bansari Mayur Kamdar and Shreyashi Sanyal
May 2 (Reuters) - The Brazilian real fell on Tuesday
after data showed manufacturing activity in Latin America's
largest economy contracted in April, while a regional stocks
index fell to a near one-month low as oil prices plunged.
The real slid 1.1% against the dollar, while Brazil's Bovespa stock index tumbled 2.4% to its lowest level since early April, led by falls in miners and oil firms. The S&P Global Brazil Manufacturing Purchasing Managers' Index (PMI) fell to 44.3 in April from 47.0 in March, remaining below the 50.0 line that separates growth from contraction.
The head of oil major Shell Plc's Brazilian operations on Monday said a temporary four-month oil-export tax established in March was a concerning development that could hurt the country's investment attractiveness.
Investors also awaited an interest-rate decision by Brazil's
central bank on Wednesday, which is seen holding for the sixth
straight meeting, as it awaits unambiguous proof of disinflation
before the possible start of an easing cycle in the third
quarter, a Reuters poll showed.
"Our view is that while signaling the coming policy easing,
Campos Neto will keep rates unchanged at 13.75% on Wednesday,
but since the approval of the new fiscal framework is likely by
mid-May, this will pave the way for rate cuts to begin in
Q3/23," economists at TS Lombard wrote in a note.
Brazil President Luiz Inacio Lula da Silva presented a new fiscal framework at the end of March, which eased market concerns about uncontrolled growth of public debt. However, critics said the fiscal framework depends primarily on high revenue, the viability of which is considered uncertain. The Mexican peso fell 0.2%. Oil prices dropped after manufacturing activity in China, the world's top crude importer, fell unexpectedly in April, with markets also nervous about a possible U.S. default on its debt and watching for a rate decision by the U.S. Federal Reserve and European Central Bank (ECB) this week. Mexican stocks inched down 0.1% as cement maker Cemex , gained 6% on posting a 14% rise in first-quarter net profit.
S&P Global Mexico Manufacturing Purchasing Managers' Index was a seasonally adjusted 51.0 in April, unchanged from March. Chile's peso slipped 0.2% after the country's IMACEC economic activity index, a close proxy of gross domestic product (GDP), dropped 2.1% in March from the same month last year. The Peruvian sol slipped 0.6% against the dollar. Argentina on Monday put in place new provisions that restrict bond settlement operations in foreign currency with the purpose of decompressing pressures on alternative exchange markets, said the National Securities Commission (CNV). Supporters of a right-wing candidate who came third in Paraguay's presidential election clashed with police outside the electoral court on Monday, amid complaints of fraud in a vote that the ruling Colorado Party won comfortably. Businessman and political newcomer Carlos Pineda was the top choice of voters ahead of Guatemala's June 25 presidential election in a poll released on Tuesday.
Key Latin American stock indexes and currencies at 2023 GMT:
Stock indexes Latest Daily
%
change
MSCI Emerging Markets 973.94 -0.29
MSCI LatAm 2183.96 -2.41
Brazil Bovespa 101926.9 -2.4
5
Mexico IPC 55198.56 0.14
Chile IPSA 5371.25 -0.8
Argentina MerVal 295630.9 -0.782
8
Colombia COLCAP 1157.99 -3.41
Currencies Latest Daily
%
change
Brazil real 5.0450 0.01
Mexico peso 17.9684 -0.21
Chile peso 809.5 -0.53
Colombia peso 4687.5 0.42
Peru sol 3.7001 0.12
Argentina peso (interbank) 224.6000 -0.86 Argentina peso (parallel) 469 0.00
(Reporting by Bansari Mayur Kamdar and Shreyashi Sanyal in
Bengaluru
Editing by Christina Fincher and Matthew Lewis)
