EMERGING MARKETS-Latam FX falls amid rate-cut speculation, virus uncertainty

Market trading boards are seen at the Australian Securities Exchange in Sydney, Friday, February 9, 2018. ( AAP Image/Ben Rushton) NO ARCHIVING
    * Mexican inflation rises more than expected in June
    * Mexican cenbank seen cutting rates by 100bps -Citi
    * Prominent creditor group rejects Argentine debt deal
    * Brazil cenbank studying 'residual' cut in Selic rate 

 (Adds details, updates prices)
    By Susan Mathew and Ambar Warrick
    July 9 (Reuters) - Latin American currencies retreated
against the dollar on Thursday, while regional stocks fell in
tandem with Wall Street as rising COVID-19 infections kept risk
appetite fragile.
    Brazil's real fell about 0.3%. The country's central
bank is studying recent data showing inflation is somewhat above
expectations to see if there is room for a "residual" cut in
interest rates, its president, Roberto Campos Neto, told Reuters
in an interview late on Wednesday.
    Campos Neto said he expected the bank's growth projections
to improve as pandemic emergency economic aid measures continued
to spur improved growth.
    Still, borrowing rates in the country are at record lows,
making the real less viable as an investment destination.
    Brazilian stocks fell about 0.5%.
    The MSCI's index of regional stocks shed
nearly 1%, tracking a choppy session on Wall Street as investors
weighed improving economic data against a rapid rise in
coronavirus cases. The dollar gained on safe-haven flows.

    Worries remained that surging coronavirus cases may lead to
tighter containment measures, which could delay the ongoing
economic recovery. The global number of cases breached 12
million on Wednesday, while Brazil surpassed 1.7 million
confirmed cases and 67,964 deaths.    
    Latam markets have rebounded sharply from March lows, but
surging cases, political issues, concerns over sovereign debt
and deteriorating economic fundamentals have weighed. 
    Chilean stocks led losses for the day with a 4.2%
drop, while the peso snapped three straight sessions of
gains.
    Mexico's peso was flat as the country's consumer
price inflation accelerated more than expected in June but
stayed within the central bank's target rate, official data
showed. 
    "Given the significant output contraction ... and inflation
hovering around the mid-point of the central bank's target, we
think Banxico will further cut (interest rates by) 100 basis
points to a terminal rate of 4.0%," Citigroup strategists said
in a note. They expect a cut of 50 basis points in August,
followed by 25-basis-point cuts in September and November.
    Argentine markets were closed for a local holiday. A
prominent group of funds had dismissed the government's "final"
debt offer as only a good starting point on Wednesday, but
analysts still believe a deal to restructure Argentina's $65
billion sovereign debt can be struck.
    
    Key Latin American stock indexes and currencies:
    
    Stock indexes             Latest     Daily % change
 MSCI Emerging Markets         1079.04              0.83
                                        
 MSCI LatAm                    1957.81             -0.95
                                        
 Brazil Bovespa               99268.21              -0.5
                                        
 Mexico IPC                   36844.22             -1.71
                                        
 Chile IPSA                    4009.86             -4.21
                                        
 Colombia COLCAP               1138.65             -1.29
                                        
                                                        
       Currencies             Latest     Daily % change
 Brazil real                    5.3585             -0.25
                                        
 Mexico peso                   22.6275              0.12
                                        
 Chile peso                      788.9             -0.32
                                        
 Colombia peso                 3621.57              0.29
 Peru sol                       3.4997              0.57
                                        
 
    

 (Reporting by Susan Mathew in Bengaluru;
Editing by Marguerita Choy and Leslie Adler)
  

Source: Read Full Article