April 6
By Shashwat Chauhan
Most Latin American currencies advanced on Monday, while stocks were mixed after reports of progress on a ceasefire between the U.S. and Iran helped revive risk appetite worldwide as traders returned after a long weekend break.
A framework to end hostilities has been put together by Pakistan and exchanged with Iran and the U.S. overnight, a source aware of the proposals told Reuters.
However, some of the risk appetite tapered off after Iran’s official IRNA news agency said Iran conveyed its response to the proposal and is rejecting a ceasefire and emphasizing the necessity of a permanent end to the war.
Trump is also set to speak about the ceasefire proposal at a press conference at 1 p.m. ET (1800 GMT), a White House official told Reuters. He has said the Tuesday deadline he has set for Iran to make a deal is final.
“Geopolitical tensions around Iran and the Strait of Hormuz are driving energy supply disruptions, market volatility and urgent diplomatic efforts, with ceasefire talks offering limited near-term clarity,” said Bob Savage, head of markets macro strategy at BNY.
Trading in most Latin American countries picks up on Monday after most regional markets were closed for the Good Friday holiday, with most currencies appreciating against a globally weaker dollar.
The Mexican peso led the bounce across the region, appreciating 0.4% against the dollar to its highest in more than 10 days, while Brazil’s real inched 0.1% higher.
Peru’s sol ticked 0.8% higher in light volume ahead of a local interest rate decision later this week where the country’s central bank is widely expected to hold its main lending rate steady.
The Middle East conflict has led to some sharp re-pricing of interest rate expectations around the world, with Latin America currently presenting a mixed picture as policymakers grapple with the uncertainty.
Policymakers at Chile’s central bank briefly considered the option of raising interest rates at their March meeting due to the geopolitical uncertainty, minutes from their March meeting showed last week.
Brazil’s central bank cut its interest rates when it met in March, while Mexico’s central bank also loosened its monetary policy in its last meeting.
A Reuters poll of FX strategists, however, found that Latin America’s top currencies are forecast to weaken in April as policymakers turn defensive on potential economic ructions from the U.S.-Israeli war on Iran.
Among equities, local bourses were largely mixed but MSCI’s index tracking regional stocks advanced 0.1%.
Braskem Idesa, the joint venture between Brazilian petrochemical firm Braskem and Mexico’s Grupo Idesa, is preparing to file for Chapter 11 bankruptcy protection in the U.S. as early as next week, a media report said.
Later this week, eyes would be on a slew of inflation data expected around the world including in Brazil, Mexico and the U.S.
HIGHLIGHTS
** Bolivia to eliminate tax on financial transactions, restore tax credit for fuel purchases
** Iraq could restore oil exports to pre-war level within a week if Hormuz reopens, Basra Oil chief says
** Colombia finance minister says 3% inflation target should be reviewed
Key Latin American stock indexes and currencies:
Stock indexes Latest Daily % change
MSCI Emerging 1450.4 0.66
Markets
MSCI LatAm 3142 0.08
Brazil Bovespa 188079.74 0.01
Mexico IPC 69289.99 -0.59
Chile IPSA 10736.28 -0.03
Argentina MerVal 3002683.26 0.11
Colombia COLCAP 2297.05 0.71
Currencies Latest Daily % change
Brazil real 5.1535 0.06
Mexico peso 17.7887 0.38
Chile peso 914.45 0.5
Colombia peso 3663.71 0.05
Peru sol 3.4239 0.81
Argentina peso 1,388.00 0.43
(interbank)
Argentina peso 1,390.00 1.07
(parallel)