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Geopolitical woes rattle Russian rouble; Latam FX firm

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Russia’s rouble slumped 1% on Thursday,

pressured by geopolitical tensions, while most Latin American

currencies shrugged off early losses thanks to a weaker dollar.

The rouble slid past 75 per dollar after the Kremlin

said talks with the United States and NATO this week had been

“unsuccessful” in bridging fundamental differences over the

Ukraine crisis and Moscow’s demands that NATO pull back from

central and eastern Europe.

The United States said it had largely settled on the options

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for sanctions against Russia should it invade Ukraine and would

be prepared to impose them as soon as any tanks roll.

Brazil’s real hit near two-month highs, with

data showing Brazil’s services activity returned to positive

territory in November with a much stronger than expected gain,

putting the sector above pre-pandemic levels despite high

inflation.

But with weaker than expected industrial production and

civil construction inputs, Citigroup strategists now expect

fourth-quarter GDP to contract. Combined with expected tighter

monetary policy and rising Omicron cases in Brazil, Citi expects

a contraction in 2022 annual GDP.

With the dollar taking a hit as speculation about tighter

U.S. monetary policy eased, most other Latam currencies traded

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steady to higher with Colombia’s peso hitting one-month

highs.

Among stocks, Brazilian meatpackers BRF, Marfrig

and JBS jumped between 2.2% and 3.8%. BRF

signed a memorandum of understanding with Saudi Arabia’s

sovereign fund to create a joint venture to make poultry

products in the Middle Eastern country.

Brazilian wood panels manufacturer Dexco rose

more than 2% after announcing a new $49 million share buyback

program.

Miner Vale slid 1% as iron ore prices dipped on

demand uncertainty. JPMorgan sees cost inflation ruling miners’

earnings in the second half of 2022, and expects Rio Tinto

, BHP and Vale to retain conservative guidance,

and supply to remain tight in 2022.

After Citigroup announced the sale of its consumer

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banking operations in Mexico, the country’s government on

Wednesday said it expected plenty of bidders to emerge for the

assets.

In China’s struggling property sector, China Evergrande

Group’s main unit Hengda Real Estate Group has reached

an agreement with bondholders to delay payments for a 4.5

billion yuan ($707.5 million) onshore bond, Hengda said in a

filing on Thursday.

In Argentina, inflation likely rose back up to 3.6% in

December, a Reuters poll showed, which would be the highest

level since last April. The country’s central bank recently

hiked the benchmark interest rate to 40%, its first increase in

over a year.

Key Latin American stock indexes and currencies at 1449 GMT:

Stock indexes Latest Daily %

change

MSCI Emerging Markets 1266.17 -0.09

MSCI LatAm 2205.83 0.8

Brazil Bovespa 105699.50 0.01

Mexico IPC — —

Chile IPSA 4551.53 0.97

Argentina MerVal 85373.23 0.321

Colombia COLCAP 1446.89 -0.27

Currencies Latest Daily %

change

Brazil real 5.5121 0.42

Mexico peso 20.3591 -0.12

Chile peso 821.9 0.12

Colombia peso 3943.46 0.69

Peru sol 3.8969 -0.33

Argentina peso 103.7100 -0.04

(interbank)

(Reporting by Susan Mathew in Bengaluru

Editing by Mark Potter)

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