By Susan Mathew and Ambar Warrick
May 8 (Reuters) – The Brazilian real strengthened for the first time this week, rebounding from historic lows, while most other Latin American currencies strengthened on Friday on signs that tensions between the United States and China softened.
With the exception of the real, most currencies have also been set for weekly gains, as optimism about the major economies coming out of coronavirus blockages again has bought a measure of risk appetite to the markets.
A positive dialogue between Beijing and Washington has allayed investors’ concerns over a resumption of trade between the two.
“The last thing global investors need right now in the context of the global coronavirus pandemic is a boost from the increased risk of a trade war,” wrote Han Tan, market analyst at FXTM.
The US dollar rose after data showed that the world’s largest economy had lost fewer jobs than expected last month.FRX /
The real from Brazil BRBY pink 1.6% as the unthinkable once level of 6.00 for the dollar stayed in view. The currency plunged to new lows on Thursday after the central bank cut interest rates deeper than expected.
Tit is true BRL = lost almost 5% over the week and is one of the worst performing emerging currencies this year.
“There are downside risks for the BRL, on the one hand because the economic outlook could deteriorate further, and on the other hand because the critics against crisis management (President Jair) Bolsonaro could increase and exacerbate the political crisis, “wrote You-Na Park-Heger, FX. and EM analyst at Commerzbank.
Coins of Mexico MXN =, Colombia COP = and Chile CLP = all pink about 1%, track gains in oil and base metal prices.
Actions followed suit, with those of Brazil .BVSP on your mind. Mexican stocks .MXX increased by 2%, while Colombian actions .COLCAP added 0.8%.
The Argentinian markets were filled with uncertainty, as the deadline set by the government for bondholders to accept its offer to restructure the debt was only a few hours away.
The double economic crisis and the debt crisis have widened a huge gap between the Argentine peso ARS = official rate, kept almost static by capital controls, and the fall of the black market and other unofficial rates.
Still, argentine stocks .MERV were on the verge of surpassing their peers for the week with a gain of more than 11% as the country’s main public and minor services were seen on stable ground even in the midst of the coronavirus crisis.
Earlier this week, the Colombian central bank announced that it expects gross domestic product to contract by 2% to 7% this year due to the impact of the pandemic on productivity.
Credit Suisse analysts expect a 4.1% contraction.
Latin American stock indices and key currencies at 1921 GMT:
Stock market indices
Daily change in%
MSCI Emerging Markets .MSCIEF
MSCI LatAm .MILA00000PUS
Brazil Bovespa .BVSP
Mexico IPC .MXX
Chile IPSA .SPIPSA
Argentina MerVal .MERV
Colombia COLCAP .COLCAP
Daily change in%
Real brazil BRBY
Mexican Peso MXN = D2
Chilean Peso CLP = CL
Colombian Peso COP =
Peru soil PEN = PE
Argentine Peso (interbank) ARS = RASL
(Reporting by Susan Mathew to Bengaluru; Editing by Steve Orlofsky and Sonya Hepinstall)
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