EMERGING MARKETS – Latin American stocks and currencies extend their rally as conflict in Ukraine escalates

0

Band Anisha Sircar and Bansari Mayur Kamdar

March 24 (Reuters)Latin American stocks and currencies gained for a seventh straight day on Thursday as a continued rise in commodity prices offset jitters over fallout from the war in Ukraine, including new sanctions on the Russia.

Western leaders meeting in Brussels on Thursday agreed to bolster forces in Eastern Europe, increase military aid to Ukraine and toughen sanctions on Russia as Moscow’s assault on its neighbor enters in his second month.

“I don’t think we’ve seen any impact from the NATO meetings…some of the higher beta currencies are still doing pretty well,” said Brendan McKenna, international economist and FX strategist at Wells Fargo Securities.

MSCI Broad Emerging Markets Index for Equities .MSCIEF and currencies .MIEM00000CUS slipped, while Latam shares .MILA00000PUSPink 1.5% and currencies .MILA00000CUS won 0.4%.

“Usually in a crisis, high-yielding emerging currencies sell off, but that’s not the case anymore,” said Jane Foley, head of FX strategy at Rabobank.

“Even if there is a resolution, Russia is going to remain a pariah…Commodity currencies are going to stay in favor for months, if not years, due to a recovery (of supply networks). “

The Mexican peso MXN= gained 0.6%. Mexico’s central bank raised its benchmark interest rate by 50 basis points to 6.5% amid heightened uncertainty surrounding inflationary pressures due to the war in Ukraine.[nL2N2VR1NE]

Chile’s central bank is also expected to raise the country’s benchmark interest rate by 200 basis points to 7.5% at its March meeting as it tries to contain high inflation, according to a poll. The Chilean peso soared 0.5% against the dollar.

The true of Brazil BRL= erased earlier gains and fell 0.1% in volatile trading on Thursday. Brazil’s central bank chief Roberto Campos Neto said another interest rate hike in June was not the most likely scenario policymakers were considering, signaling that the country’s aggressive monetary tightening could be concluded in May.

Elsewhere, energy and metals companies sent Russian stocks soaring as trading resumed after being suspended for nearly a month.

The South African Rand ZAR= jumped 10.5% after the Reserve Bank of South Africa raised its main policy rate by 25 basis points ZAREPO=ICE, as expected. The central bank cited risks to the inflation outlook from the war, among other reasons for the rise.

Hungary’s central bank also raised its NBHK one-week deposit rate by 30 basis points to 6.15% in a weekly tender, extending its rate-tightening campaign amid Russia’s invasion of lending. Neighboring Ukraine is fueling new inflationary pressures.

Major Latin American Stock Indices and Currencies as of 1954 GMT:

Stock indices

Last

% daily change

MSCI Emerging Markets .MSCIEF

1136.21

-0.4

MSCI Latam .MILA00000PUS

2631.96

1.51

BrazilBovespa .BVSP

118722.65

1.08

Mexico IPC .MXX

55643.85

0.89

Chile IPSA .SPIPSA

4954.51

2.34

Argentina MerVal .MERV

90106.60

-0.07

Colombia COLCAP .COLCAP

1593.52

0.39

Currencies

Last

% daily change

Brazilian real BRBY

4.8344

0.19

mexican peso MXN=D2

20.0910

0.65

chilean peso CLP=CL

788.2

0.41

Colombian peso COP=

3783.01

-0.09

Soil of Peru PEN=PE

3.73

0.94

Argentinian peso (interbank) ARS=RASL

110.1700

-0.09

Argentinian peso (parallel) ARSB=

198

1.52

(Reporting by Anisha Sircar, Susan Mathew and Bansari Mayur Kamdar in Bengaluru; Editing by Andrea Ricci and Marguerita Choy)

(([email protected];))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Share.

Comments are closed.