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EMERGING MARKETS-Colombian peso snaps 4-day winning streak; Brazil's real rises

Shreyashi Sanyal
·3-min read

By Shreyashi Sanyal Oct 22 (Reuters) - The Colombian peso fell for the first time in five days on Thursday as the oil exporter's currency took a hit from weakening crude prices, while Brazil's real firmed the most among Latin American currencies amid optimism over its economic recovery. The peso slipped from a one-month high to fall 0.3% against the dollar as oil prices struggled to stay afloat after higher U.S. gasoline inventories signaled a deteriorating demand outlook. Colombia recently approved a 314 trillion peso ($81.7 billion) budget for next year, which is the country's biggest ever and 8.3% higher than this year's, but analysts call it a relatively austere sum for 2021. Economists at Capital Economics note, "the rebound in demand will be held back by limited fiscal support from the government and low oil prices." Brazil's real firmed 0.5% as investors remained hopeful of the pace at which the country's economy is recovering. Latest figures have shown a rebound in retail sales, manufacturing, industrial production and international trade. Latin America's biggest economy also benefited from a pick-up in demand in China, its biggest export hub for agricultural products. However, the country's public finances remain a major sticking point for business confidence as investors raise doubts about the government's ability to fund a new fiscal package. "The scenario for the public accounts for the next few years is increasingly challenging, as the government is showing a desire to continue to increase spending next year," said Solange Srour, Brazil chief economist at Credit Suisse. Brazil's government early next month will revise its 2020 gross domestic product forecast, currently a contraction of 4.7%, special secretary at the economy ministry Waldery Rodrigues said. Mexican annual inflation quickened faster than expected in the first two weeks of October, pushing the rate above the central bank's tolerance threshold, figures from the national statistics office (INEGI) showed. The Mexican peso rose 0.4%. Chile's peso rose, while Argentina's peso slipped. The MSCI's index for Latin American equities gained 0.7%, supported by a rise in Sao Paulo stocks. Shares in Brazilian motor maker WEG SA were up 3%after the company reported a 54% rise in third-quarter profit on Wednesday, as it saw demand for equipment grow. Key Latin American stock indexes and currencies at 1534 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1135.13 -0.24 MSCI LatAm 1968.89 0.66 Brazil Bovespa 101378.68 0.82 Mexico IPC 38513.16 -0.4 Chile IPSA 3785.22 0.07 Argentina MerVal 50513.71 0.848 Colombia COLCAP 1175.54 -0.2 Currencies Latest Daily % change Brazil real 5.5855 0.53 Mexico peso 21.0054 0.44 Chile peso 779.4 0.37 Colombia peso 3777.76 -0.35 Peru sol 3.6017 -0.14 Argentina peso (interbank) 78.0600 -0.40 Argentina peso (parallel) 184 -0.54 (Reporting by Shreyashi Sanyal in Bengaluru)