ReutersReuters

Brazil's real cuts losses after Haddad picked as FinMin

Perkara utama:
  • Transport, food drive Brazil's November inflation rise of 0.41%
  • Peru president open to early election talks
  • Brazil's Lula names ex-Sao Paulo mayor Haddad as FinMin

Brazil's real cut a chunk of its session losses on Friday after President-elect Luiz Inacio Lula da Silva announced Fernando Haddad as his finance minister, while broader markets were cautious after data showed strong U.S. inflation.

The real (BRBY), USDBRL was last down 0.3%, after falling as much as 1.4% during the session.

Lula, who is set to take office in January, also announced other cabinet picks after appointing former Sao Paulo Mayor Haddad, ending days of speculation about his ministerial appointments. The choice of Haddad was in line with expectations.

Haddad can be portrayed as a pragmatic politician given his educational qualification and political experience, said Mauricio Une, head of South America macro strategy at Rabobank.

"I believe the market would now like to understand who Haddad will invite into his ministry and help him design economic policies."

The real's move helped it pare weekly losses to below 1%. It had jumped 3.6% last week.

Data showed Brazil's consumer prices rose 0.41% in November, below market forecasts of 0.53%.

"Brazil is the world's #1 disinflation success story," said Natalia Gurushina, emerging markets fixed income economist at VanEck, in a note.

BRAZILIAN REAL UNDERPERFORMS LATAM PEERS THIS YEAR
Thomson ReutersBRAZILIAN REAL UNDERPERFORMS LATAM PEERS THIS YEAR

Some other emerging market currencies fell, with South Africa's rand USDZAR and Mexico's peso USDMXN down about 0.9% each as the dollar cut losses after the U.S. Labor Department reported that producer prices rose more than expected last month on an annual basis.

This increased hawkish anticipation for the Federal Reserve's much anticipated meeting next month where bets are that the Fed would opt for a smaller interest rate hike following four 75 basis point hikes. (FEDWATCH)

Mexico's peso is on course for a drop of nearly 2% on the week, in what could be its sharpest decline in four months.

Top copper producer Chile's peso USDCLP added 0.3% against the dollar, supported by firm copper prices as investors anticipated that China's easing of coronavirus restrictions will boost economic growth and metals demand.

Peruvian markets were closed. President Dina Boluarte said she was willing to discuss early elections with the country's political and civil organizations, but ruled out kick-starting constitutional changes for the time being.

Latam stocks (.MILA00000PUS) fell 0.4% on Friday and were down 3.4% for the week, sharply underperforming their broader EM peers.

However, Brazil's Bovespa IBOV jumped 0.6% with materials being the biggest boost.

Key Latin American stock indexes and currencies:

Stock indexes

Latest

Daily % change

MSCI Emerging Markets EEFS

978.17

0.92

MSCI LatAm (.MILA00000PUS)

2149.94

-0.39

Brazil Bovespa IBOV

107792.18

0.51

Mexico IPC ME

50686.95

-0.77

Chile IPSA SP_IPSA

5170.88

-0.63

Argentina MerVal IMV

171177.89

1.837

Colombia COLCAP (.COLCAP)

1237.55

0.64

Currencies

Latest

Daily % change

Brazil real (BRBY)

5.2452

-0.59

Mexico peso USDMXN

19.7776

-0.83

Chile peso USDCLP

860.9

0.48

Colombia peso USDCOP

4804.85

0.21

Peru sol USDPEN

3.8426

0.17

Argentina peso (interbank) USDARS

169.8700

-0.22

Argentina peso (parallel) (ARSB=)

312

0.96

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