Brazilian real leads Latam FX higher; stocks jump 2%

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Latin American stocks rose over 2% on

Monday as risk sentiment improved globally and firm metal prices

boosted the commodity-heavy indexes, while currencies rose on a

weaker dollar.

The MSCI’s index of Latam stocks climbed

2.4%, outperforming the 0.1% decline in the broader emerging

market index.

“We still have a dynamic where some of the Latam countries

could benefit more than their emerging market peers just because

they are better placed in this commodity rally and some of the

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central banks are a little more ahead of the curve,” said Rachel

Ziemba, founder at Ziemba Insights.

The U.S. dollar index fell 0.7%, supporting riskier

currencies, while an improvement in sentiment around China as

Shanghai started edging out of lockdown also reassured

investors.

The currencies index advanced 1.1%, led by a

1.8% jump in the Brazilian real,.

Meanwhile, miner Vale SA led Brazil’s Bovespa

index 1.1% higher, as iron ore prices surged after India

raised export duties on some commodities to rein in inflationary

pressures.

Copper prices climbed to their highest in more than two

weeks, buoyed by declining inventories and a weaker dollar,

lifting currencies of producers Chile and Peru up

0.9% and 0.5%, respectively.

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The Mexican peso appreciated 0.4% in a market

attentive to the upcoming monetary policy decisions by the U.S.

Federal Reserve and the Bank of Mexico to combat inflation.

Inflation data from Mexico due later this weak is forecast

to have slowed in the first half of May, although still far

above central bank targets, reinforcing expectations of

continued interest rate hikes through the rest of the year.

“Mexico continues to be a country that’s really struggling

to grow and one that doesn’t have much policy space on the

fiscal and monetary side. And so, we’re going to continue to see

this combination of relatively high inflation and low growth,”

said Ziemba.

“The central bank is going to likely continue on its hiking

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path with moderate hikes.”

In Colombia, the candidates for the presidency closed their

campaigns on Sunday with massive public events to gain the

support of the voters for elections week.

The Colombian peso rose nearly 1% against the dollar.

Elsewhere, the Russian rouble firmed 4.5%

against the dollar supported by capital controls and an upcoming

month-end tax period.

Key Latin American stock indexes and currencies at 1445 GMT:

Stock indexes Latest Daily %

change

MSCI Emerging Markets 1034.79 -0.05

MSCI LatAm 2433.71 2.42

Brazil Bovespa 109572.31 1

Mexico IPC 51577.43 0.11

Chile IPSA 5084.47 2.04

Argentina MerVal 88968.27 0.964

Colombia COLCAP 1475.08 1.08

Currencies Latest Daily %

change

Brazil real 4.7971 1.54

Mexico peso 19.7971 0.27

Chile peso 827.8 1.10

Colombia peso 3927.85 0.94

Peru sol 3.707 0.57

Argentina peso (interbank) 118.9500 -0.39

Argentina peso (parallel) 202 0.99

(Reporting by Bansari Mayur Kamdar and Shreyashi Sanyal in

Bengaluru; Editing by Bernadette Baum)