*
Argentina signs debt restructuring agreements with France, Spain and Sweden
*
Argentina’s election lineup change boosts markets
*
Ex-first lady and anti-corruption candidate faces runoff election in Guatemala
*
Latam FX up 0.4%, shares up 0.1%
(Updated at 1845 GMT)
By Shreyashi Sanyal and Bansari Mayur Kamdar
June 26 (Reuters) – Currencies and stocks in resource-intensive Latin America rose on Monday, followed by higher commodity prices and a muted dollar, shrugging off geopolitical tensions in Russia that have gripped broader emerging markets.
The MSCI index of Latin American currencies gained 0.4%, while its equity counterpart also gained around 0.1%.
A broader panel of emerging market stocks hit their lowest levels in nearly three weeks early in the session.
A short-lived mutiny by Russian Wagner Group mercenaries over the weekend has prompted Western allies to consider how President Vladimir Putin could restore his authority and what that might mean for the war in Ukraine.
The news sparked one of the most volatile sessions in Russian markets this year, sending the ruble to its weakest level since March 2022, at 85.10 against the dollar.
The Latin American currency index is up for five straight weeks against a weaker dollar. Higher commodity prices have also helped assets, as have bets on rate cuts by the region’s major central banks.
The Brazilian real gained 0.5% against the dollar, while oil-producing Mexico and Colombia’s currencies each gained 0.4%, helped by firm crude prices.
“Geopolitically, the weekend’s events expose the tensions within Putin’s system and show that Putin is not always in control of all factions in his country, but that doesn’t mean it matters for financial markets,” Joachim Klement said. Investment Strategist at Liberum.
Argentina’s electoral shift, with the ruling Peronist coalition torpedoing a left-wing candidate in favor of a centrist economy minister, boosted local markets.
The story goes on
Treasury bonds rose about 4% on average on the news, while equities gained 2.9%.
The Argentine government also signed bilateral agreements on this
refinance debt
with a trio of Paris Club members as the cash-strapped government struggles to meet its liabilities amid a severe economic downturn.
Latin American investors were also optimistic that the region’s major central banks, which have led some of the most aggressive tightening over the past two years, may now be poised to lead the way in cutting interest rates around the world amid clear signs of slowing inflation in places like… Chile and Brazil.
“Latin American currencies enjoy relatively solid support from high interest rates,” said Andres Abadia, chief Latin American economist at Pantheon Macroeconomics.
“The increased carry has been the main reason for the solid FX performance over the last few quarters.”
Traders in Brazil are betting that the region’s central bank will start a cycle of monetary easing in August, while Brazilian Finance Minister Rogerio Ceron said the sooner monetary easing begins, the more likely conditions will be “reasonable” in 2024.
Guatemalans voted for a new president in an August runoff on Sunday, with centre-left parties leading according to early results.
Elsewhere, Pakistan’s central bank hiked interest rates by 100 basis points to 22% at an emergency meeting, but dollar-denominated bonds soared after the country’s parliament approved a revised budget to seek a deal with the International Monetary Fund (IMF). achieve ).
Kenya’s central bank raised interest rates to 10.5%, citing ongoing inflationary pressures, its monetary policy committee said.
(Reporting by Shreyashi Sanyal and Bansari Mayur Kamdar in Bengaluru; Editing by Lisa Shumaker and Nick Zieminski)
Comments are closed.