Home Argentina market EMERGING MARKETS-Peruvian Soil Leads Latam FX Losses as Castillo Takes Presidency

EMERGING MARKETS-Peruvian Soil Leads Latam FX Losses as Castillo Takes Presidency


By Ambar Warrick July 20 (Reuters) – Peruvian sol caused losses in Latin American currencies on Tuesday after socialist candidate Pedro Castillo was confirmed as president, while trade in most other units was halted by fear of an economic slowdown due to the variant of the Delta coronavirus. Peruvian sol fell 0.5% to 3.9581 per dollar, approaching a record low of 3.9871 after falling 1.4% on Monday, its worst day in more than a month, after confirmation from Castillo. Castillo has pledged to reformulate the constitution and raise taxes on mining companies at the world’s second-largest copper producer, although he has taken a more moderate line in recent weeks and hinted at a more market-friendly approach. The MSCI Latin American Currency Index (Latam) lost 0.1%, after losing 1.8% on Monday, it recorded its worst day since September. An increase in cases of the infectious Delta variant triggered a sharp decline in most risk assets this week over fears that a global economic recovery could be jeopardized. “Growth concerns have accumulated in recent weeks, and it was only a matter of time before the relentless decline in global yields began to be seen as a reflection of these underlying concerns,” Ned Rumpeltin, European Head of Foreign Exchange Strategy at TD. Titles, written in a note. The losses have pushed Latam assets away from recent highs, eroding gains made on hawkish central bank moves and improving economic indicators. Latam assets have also outperformed their broader emerging market counterparts so far in 2021. The Brazilian real remained stable after losing more than 2% on Monday, with data showing that China’s imports of Brazilian soybeans, a key export, slipped in June from the previous year due to low grinding margins. Rising inflation in Brazil could also slow down the economic recovery. The government has said it plans to introduce new social assistance programs this year, after the current COVID-related program expired in October. The Mexican peso slightly extended a loss of nearly 1% from Monday as COVID cases continued to rise in the country, raising the chances of a third wave. Latam stocks also fell early in trading, extending a 3.2% loss from Monday. The MSCI index briefly hit a nearly two-month low. Colombian markets have been closed for a public holiday. Main Latin American stock indexes and currencies: Latest daily change in% MSCI Emerging Markets 1310.30 -0.53 MSCI LatAm 2498.95 0.04 Brazil Bovespa 124687.50 0.24 Mexico CPI 49499.77 0.82 Chile IPSA 4,280.31 1.13 Argentina MerVal 62,184.10 0.082 Currency Last daily change in% Brazil real 5.2334 0.297 Mexican peso 20.07 -0.04 Chilean peso 759.77 -0.04 Peruvian sol 3.9581 -0 , 46 Argentine peso 96.3300 -0.02 (interbank) (Reporting by Ambar Warrick; editing by Edmund Blair)

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