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Chilean peso climbs after right-wing victory in assembly
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Brazil's Braskem jumps as controller gets offer for firm
By Sruthi Shankar May 8 (Reuters) - Chilean markets rallied on Monday after right-wing parties won most of the seats in a council tasked with redrafting the country's constitution, while other Latin American markets were mixed ahead of crucial U.S. inflation data this week. The Chilean peso rallied as much as 1.3% to 782.60 per dollar before shedding some gains. The currency was last up at 793.4, while stocks benchmark S&P IPSA CLP rallied 2.6% to a near eight-month high.
Chilean right-wing parties won a majority of votes on Sunday to elect advisers to draft a new constitution, marking a sharp shift from a progressive majority that drafted a failed first constitutional rewrite. "This election reaffirms our view that the new constitutional process is unlikely to produce much noise, not only because the experts chosen by the Senate are more influential but also because the right holds three-fifths of the elected council, limiting the room for model-changing initiatives," Citi strategists said in a note.
Meanwhile, data showed Chile's annual rate of consumer price inflation dropped below 10% in April to its lowest in more than a year, boosting expectations a monetary easing cycle will start in the coming months. The central bank will meet on Friday and policymakers are expected to hold the benchmark rate at 11.25%. However, with Chilean inflation expected to keep falling in the coming months, traders are expecting interest rate cuts in the second half of the year.
The wider Latin American currencies index slipped 0.3% after hitting near eight-year highs in the previous session. Brazil's real slid more than 1% at the start of a week which will see the release of U.S. inflation data as well as minutes from the Brazil central bank's latest policy meeting. Brazilian Finance Minister Fernando Haddad said the government will appoint Gabriel Galipolo, his No.2 at the ministry, and Ailton Aquino Santos for vacant positions at the central bank board of directors. Meanwhile, a gauge of the region's stock markets climbed 0.5% to a near three-week high despite weakness on Wall Street. Brazil's Bovespa gained 1.2%, with Braskem SA up 5.8% after the petrochemical producer said its controlling shareholder Novonor had received a non-binding offer for the firm, which will now be "analyzed alongside other interested parties". Itau Unibanco Holding SA rose 1.3% as Brazil's biggest private bank reported a 14.6% rise in first-quarter recurring net profit, boosted by a larger loan portfolio with better spreads.
Key Latin American stock indexes and currencies:
Latest Daily % change MSCI Emerging Markets 988.66 0.71 MSCI LatAm 2262.23 0.46 Brazil Bovespa 106383.68 1.17 Mexico IPC 54923.52 -0.03 Chile IPSA 5624.57 2.63 Argentina MerVal 300298.88 1.063 Colombia COLCAP 1159.19 -0.43
Currencies Latest Daily % change Brazil real 5.0035 -1.22 Mexico peso 17.8170 -0.40 Chile peso 793.4 0.03 Colombia peso 4507.18 0.41 Peru sol 3.6889 0.09 Argentina peso (interbank) 227.6000 -0.59 (Reporting by Sruthi Shankar in Bengaluru Editing by Christina Fincher)
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