EMERGING MARKETS-Mexican peso, Peruvian sol lead declines in Latam ahead of election weekend

PUBLISHED: Thu, 03 Jun 2021 18:54:53 GMT

* Mexico’s mid-terms elections eyed * Peruvians await presidential elections * Brazil closed for public holiday (Adds bullets, details; updates prices throughout) By Susan Mathew and Shreyashi Sanyal June 3 (Reuters) – The Mexican peso and the Peruvian sol led declines among Latin American currencies on Thursday, with Mexico awaiting mid-term elections and citizens of the Andean country headed into presidential polls this weekend. Currencies in emerging markets were mostly subdued as the dollar climbed on stronger-than-expected U.S. jobs data that suggested an improving labor market. MSCI’s index of EM currencies slipped slightly from all-time highs, its Latin American counterpart was flat. Attention now turns to U.S. non-farm payrolls data on Friday to gauge if a surprisingly strong U.S. economic rebound poses a threat to the assumption that interest rates will stay low for a long time. Mexico’s peso fell 1.2%, with the weekend elections set to determine the nature of reforms in the country. “The lower the vote count for the (ruling party) MORENA-led coalition (in the lower house), the less anxiety about potential adverse changes to Mexico’s institutional framework,” said analysts at Credit Suisse. They cited initiatives that seek to modify the constitution on the energy front, and limit the powers and reach of independent entities for the benefit of the federal government, as some of the party’s possible reform moves that would see a negative reaction from the market. Peru’s sol fell 1.1% ahead of a polarized run-off between socialist candidate Pedro Castillo and Keiko Fujimori, the free-market scion of a powerful political dynasty. Analysts say whoever wins, the South American country is set for a volatile and uncertain road ahead. Turkey’s lira dropped more than 1% after inflation there rose less than expected, while South Africa’s rand lifted off session lows after ratings agency S&P said the country’s fiscal deficits are declining slightly faster than initial expectations. Colombia’s peso fell further from six-week highs, down 0.2%. Anti-government protests in Colombia blocked exports of around 800,000 60-kg bags of coffee in May, projections from the local coffee growers federation released on Wednesday found. What began as a protest against tax reforms has shaped up to be a broader uprising against the social and economic policies of President Ivan Duque. The Chilean peso fell after posting its best session in a month and a half on Wednesday, while Santiago stocks tumbled 4.5%. Prices of copper, Chile’s largest export, fell below $10,000 a tonne after strong U.S. data. Markets in Brazil were closed for a local holiday. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 1381.85 -0.48 MSCI LatAm 2646.31 -0.41 Brazil Bovespa – – Mexico IPC 50397.22 -0.69 Chile IPSA 4197.95 -4.46 Argentina MerVal 63344.13 1.093 Colombia COLCAP 1256.38 0.67 Currencies Latest Daily % change Brazil real – – Mexico peso 20.1180 -1.15 Chile peso 719.4 -0.04 Colombia peso 3658.75 -0.20 Peru sol 3.8698 -1.29 Argentina peso (interbank) 94.8100 -0.03 Argentina peso (parallel) 153 1.96 (Reporting by Susan Mathew and Shreyashi Sanyal in Bengaluru Editing by Mark Potter and Barbara Lewis)

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