Post by scumbuster on Jun 7, 2023 14:45:25 GMT -5
Colombia's peso outshines peers as political scandal threatens social reforms
The Colombian peso outpaced its Latin American peers on Tuesday, clinging to a 10-month high as investors cheered a likely delay in leftist President Gustavo Petro's proposed social reforms amid a political scandal.
The peso strengthened 0.7% against the greenback, extending gains from the previous session sparked by allegations over financial irregularities in Petro's election campaign, which investors hope could derail the implementation of his social reform agenda. Colombia's lower house on Monday said it would freeze debates on the labor, pension and health reforms, making it unlikely the bills will win approval before the end of the legislative session on June 20.
"We believe the allegations raised will continue to disrupt the implementation of Petro's policy agenda. With the agenda now more unlikely to become policy, Petro may enter a lame-duck period which can take a certain degree of political risk off the currency," said Brendan McKenna, international economist and FX strategist at Wells Fargo.
Goldman Sachs economists believe Petro's dwindling approval ratings ahead of October elections coupled with the unpopularity of the reforms could hurt the chances of their passage in Congress. With the recent gains, the peso has outpaced Mexico's peso to become the best performing Latin American currency in 2023 with a gain of 14%.
Mexico's peso was flat, pressured by a slump in oil prices, which retreated from a rally in the previous session on economic growth concerns. The Chilean peso gained 0.2%, while the Peruvian sol was muted. The Brazilian real edged 0.2% higher against the greenback ahead of crucial inflation data on Wednesday.
The reading is likely to show inflation declined to an eight-month low in May versus April, opening a much anticipated window for interest rate cuts in the second half of the year, a Reuters poll of economists predicted.
MSCI's Latam FX index was up marginally, with the dollar steady as investors assessed the likelihood of the Federal Reserve raising interest rates following mixed economic data. Latin American equities gained 1.0%, with Argentina's MerVal index up 2.7%.
Elsewhere, the National Bank of Poland (NBP) held its main interest rate at 6.75% on Tuesday, remaining in a wait-and-see mode as speculation grows over when the cost of credit will start to fall. South Africa narrowly avoided a recession as the economy grew marginally in the first quarter, data showed on Tuesday. Key Latin American stock indexes and currencies at 1445 GMT:
Stock indexes Latest Daily % change MSCI Emerging Markets 987.40 0.07 MSCI LatAm 2360.10 0.84 Brazil Bovespa 113864.03 1.04 Mexico IPC 53696.06 0.3 Chile IPSA 5669.10 0.26 Argentina MerVal 370827.79 2.772 Colombia COLCAP 1152.67 0.08 Currencies Latest Daily % change Brazil real 4.9200 0.20 Mexico peso 17.4480 0.05 Chile peso 797.3 0.09 Colombia peso 4255.08 0.63 Peru sol 3.687 0.07 Argentina peso 243.1500 -0.27 (interbank) Argentina peso 482 0.83 (parallel) (Reporting by Siddarth S in Bengaluru; editing by Paul Simao)
us.yahoo.com/finance/news/emerging-markets-colombias-peso-outshines-152726807.html
The Colombian peso outpaced its Latin American peers on Tuesday, clinging to a 10-month high as investors cheered a likely delay in leftist President Gustavo Petro's proposed social reforms amid a political scandal.
The peso strengthened 0.7% against the greenback, extending gains from the previous session sparked by allegations over financial irregularities in Petro's election campaign, which investors hope could derail the implementation of his social reform agenda. Colombia's lower house on Monday said it would freeze debates on the labor, pension and health reforms, making it unlikely the bills will win approval before the end of the legislative session on June 20.
"We believe the allegations raised will continue to disrupt the implementation of Petro's policy agenda. With the agenda now more unlikely to become policy, Petro may enter a lame-duck period which can take a certain degree of political risk off the currency," said Brendan McKenna, international economist and FX strategist at Wells Fargo.
Goldman Sachs economists believe Petro's dwindling approval ratings ahead of October elections coupled with the unpopularity of the reforms could hurt the chances of their passage in Congress. With the recent gains, the peso has outpaced Mexico's peso to become the best performing Latin American currency in 2023 with a gain of 14%.
Mexico's peso was flat, pressured by a slump in oil prices, which retreated from a rally in the previous session on economic growth concerns. The Chilean peso gained 0.2%, while the Peruvian sol was muted. The Brazilian real edged 0.2% higher against the greenback ahead of crucial inflation data on Wednesday.
The reading is likely to show inflation declined to an eight-month low in May versus April, opening a much anticipated window for interest rate cuts in the second half of the year, a Reuters poll of economists predicted.
MSCI's Latam FX index was up marginally, with the dollar steady as investors assessed the likelihood of the Federal Reserve raising interest rates following mixed economic data. Latin American equities gained 1.0%, with Argentina's MerVal index up 2.7%.
Elsewhere, the National Bank of Poland (NBP) held its main interest rate at 6.75% on Tuesday, remaining in a wait-and-see mode as speculation grows over when the cost of credit will start to fall. South Africa narrowly avoided a recession as the economy grew marginally in the first quarter, data showed on Tuesday. Key Latin American stock indexes and currencies at 1445 GMT:
Stock indexes Latest Daily % change MSCI Emerging Markets 987.40 0.07 MSCI LatAm 2360.10 0.84 Brazil Bovespa 113864.03 1.04 Mexico IPC 53696.06 0.3 Chile IPSA 5669.10 0.26 Argentina MerVal 370827.79 2.772 Colombia COLCAP 1152.67 0.08 Currencies Latest Daily % change Brazil real 4.9200 0.20 Mexico peso 17.4480 0.05 Chile peso 797.3 0.09 Colombia peso 4255.08 0.63 Peru sol 3.687 0.07 Argentina peso 243.1500 -0.27 (interbank) Argentina peso 482 0.83 (parallel) (Reporting by Siddarth S in Bengaluru; editing by Paul Simao)
us.yahoo.com/finance/news/emerging-markets-colombias-peso-outshines-152726807.html