By Agamoni Ghosh and Sruthi Shankar
Nov 8 (Reuters) – Brazil’s real led Latin American currencies lower on Friday, hit by underwhelming oil auctions and political concerns, while stocks in the region fell on doubts about an agreement between Washington and Beijing to roll back tariffs.
MSCI’s index of Latin American currencies .MILA00000CUS fell nearly 1% as most currencies were thwarted by a stronger dollar, with the real set for its worst week since August 2018.
The steep declines come after major global oil companies snubbed Brazil’s biggest-ever pre-salt oil auction earlier this week.
Adding to the real’s woes was a decision by the country’s Supreme Court that could lead to the release of former President Luiz Inacio Lula da Silva from prison, which could unite leftist forces against the right-leaning government in power.
“Lula may have the ability to unite the left side of the political spectrum, thus increasing opposition to fiscal reforms and austerity measures,” said Simon Harvey, FX analyst at Monex Europe.
If released, Lula, 74, would be free to engage in politics but not eligible under Brazil’s Clean Record law to seek elected office until 2025, eight years after his first conviction.
All other major Latin American currencies were also set to end the week lower with Chile’s peso CLP= headed for its third straight week of losses as the country reels with the after-effects of its worst domestic unrest since the South American nation’s return to democracy in 1990.
MSCI’s index of Latin American stocks .MILA00000PUS fell 1.6% with most indexes in the red as conflicting trade headlines kept investors on the back foot.
The Bovespa .BVSP fell 0.6% but still was on track to the end the week higher, helped by some upbeat earnings.
Chile’s SPIPSA index .SPIPSA bucked the gloomy trend to climb 0.3% higher, driven by shares of consumer-focused companies. Data showed consumer prices in the country rose 0.8% in October, slightly above market expectations.
Latin American stock indexes and currencies at 19:01 GMT
daily % change
MSCI Emerging Markets .MSCIEF
MSCI LatAm .MILA00000PUS
Brazil Bovespa .BVSP
Mexico IPC .MXX
Chile SPIPSA .SPISA
Argentina MerVal .MERV
Colombia IGBC .IGBC
daily % change
Brazil real BRBY
Mexico peso MXN=D2
Chile peso CLP=CL
Colombia peso COP=
Peru sol PEN=PE
Argentina peso (interbank) ARS=RASL
(Reporting by Agamoni Ghosh and Sruthi Shankar)
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