Latam stocks, FX muted as economic woes weigh
Updated at 1415 GMT
Lawmakers reject Colombian government's 2025 budget proposal
Moody's: Mexico's judicial reform could impact sovereign rating
MSCI Latam stocks index up 0.1%, FX up 0.3%
By Johann M Cherian
Sept 12 (Reuters) -Moves in Latin America currencies and equities were muted on Thursday, with a rise in commodity prices tempered by caution about the fortunes of the region's resources-rich economies.
Brazil's real BRL= edged up 0.1%, lagging iron ore prices which hit a one-week high on prospects of improved seasonal demand in China IRN/. But the currency is down more than 14% year-to-date on concerns that debt-financed fiscal spending could risk the stability of the region's biggest economy.
Brazil's Finance Minister said on Thursday that President Luiz Inacio Lula da Silva has requested studies to ensure that by the end of 2026 an income tax exemption will be applied to earnings up to 5,000 reais ($880) a month.
Meanwhile, Mexico's peso MXN= and sovereign bonds were unchanged, while the local benchmark index .MXX added 0.5%.
Mexico's Senate on Wednesday approved a sweeping judicial reform, which Moody's warned could have significant implications for the nation's sovereign credit rating.
Despite Banxico being one of the last central banks in the region to begin its monetary policy easing cycle, the peso has underperformed peers, as investors priced in the likelihood of weak checks and balances in the region's second biggest economy.
"Mexican President Andres Lopez Obrador's move undermines investor confidence," said a group of analysts led by Antje Praefcke at Commerzbank.
"It is also questionable whether the law violates the North American Trade Agreement (USMCA). Under these conditions, the peso is likely to remain under downward pressure," they added.
MSCI's index tracking regional currencies .MILA00000CUS climbed 0.3% against a weak dollar, while the equities index .MILA00000PUS inched up 0.1%.
Both indexes are set for losses year-to-date as global growth worries have dimmed the demand outlook for commodities, which are the region's top exports
The currencies of copper producers Chile CLP= firmed 0.5% and Peru PEN= edged up 0.6%, tracking higher prices of the red metal. MET/L
Colombia's peso COP= was flat at 4,060 to the dollar. The Senate's economics committee rejected the government's proposed 2025 budget, arguing that the country will not be able to raise the proposed sum due to lower-than-projected tax collection.
Concerns around the oil exporter's increased risk to fiscal stability due to a collapse in tax collection has weighed on the peso - down 9% year-to-date and close to a one-year low.
Among stocks, Brazilian shares .BVSP slipped 0.4% with financials among the biggest fallers, while indexes in Chile, .SPIPSA, Colombia .COLCAP and Peru .SPBLPGPT were little changed.
Key Latin American stock indexes and currencies:
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1086.69 | 1.51 |
MSCI LatAm .MILA00000PUS | 2195.32 | 0.09 |
Brazil Bovespa .BVSP | 127252.79 | -0.5 |
Mexico IPC .MXX | 53028.86 | 0.66 |
Chile IPSA .SPIPSA | 6487.39 | -0.02 |
Argentina Merval .MERV | 1438048.36 | 0.08 |
Colombia COLCAP .COLCAP | 1340.63 | 0.04 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.6342 | 0.14 |
Mexico peso MXN= | 18.678 | -0.02 |
Chile peso CLP= | 942.95 | 0.5 |
Colombia peso COP= | 4060.06 | 0.02 |
Peru sol PEN= | 3.7192 | -0.1 |
Argentina peso (interbank) ARS=RASL | 931.5 | 2.844873859 |
Argentina peso (parallel) ARSB= | 1340 | -4.104477612 |
Reporting by Johann M Cherian in Bengaluru
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