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Chilean peso turns lower, stocks near 8-month high
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Brazil's Braskem jumps as controller gets offer for firm
(Updates prices throughout)
By Sruthi Shankar
May 8 (Reuters) - The Chilean peso shed early gains on
Monday but stocks rallied after right-wing parties won a
majority of votes to elect advisers tasked with redrafting the
country's constitution.
The Chilean peso rallied as much as 1.3% to 782.60
per dollar before turning slightly lower. The currency was last
seen down 0.3% at 796.20, but the benchmark S&P IPSA CLP stock
index rallied 2.3% to a near eight-month high.
The ballot on Sunday, in which right-wing parties won 34 of the 50 seats on the council, marked a sharp shift from a progressive majority that drafted a failed first constitutional rewrite, a move economists see benefiting local assets at least in the short term. "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 0.5% after hitting near eight-year highs in the previous session. Brazil's real slid more than 1% after Finance Minister Fernando Haddad said Gabriel Galipolo, his second-in-command at the ministry, will be nominated for a top position at the central bank, which the government has heavily criticized for its high borrowing costs. Investors are awaiting the release of U.S. inflation data as well as minutes from the Brazil central bank's latest policy meeting later this week for clues on the outlook for both U.S. and domestic interest rates. Meanwhile, a gauge of the region's stock markets climbed 0.3%. Brazil's Bovespa gained 1%, with Braskem SA up 7.2% 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 1.2% 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 988.60 0.71 MSCI LatAm 2259.14 0.33 Brazil Bovespa 106189.63 0.99 Mexico IPC 54992.92 0.1 Chile IPSA 5603.56 2.25 Argentina MerVal 302624.40 1.846 Colombia COLCAP 1159.36 -0.41
Currencies Latest Daily % change Brazil real 5.0104 -1.35 Mexico peso 17.8099 -0.36 Chile peso 796.2 -0.33 Colombia peso 4509.5 0.35 Peru sol 3.6868 0.14 Argentina peso (interbank) 227.6000 -0.59
(Reporting by Sruthi Shankar in Bengaluru Editing by Christina Fincher and Alistair Bell)
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