EMERGING MARKETS-Brazil markets recover as economy minister quashes resignation bets
* Brazil's real recovers from 12-week low
* Stimulus hopes bring cheer to Mexican peso
* U.S., Colombia to bring $5 bln in investment to rural
areas
* Chile's Q2 GDP plunges, but mining industry grows; peso up
* Brazilian retailer Magazine Luiza jumps after results
By Susan Mathew
Aug 18 (Reuters) - Brazil's real rallied on Tuesday after
Economy Minister Paulo Guedes put to rest speculation about his
imminent departure, while Mexico's peso resumed its winning
streak as the country's president said an economic recovery
plan would be unveiled in two weeks.
Against a sinking dollar, Brazil's real firmed 0.7%,
recovering from its lowest level since May. The Bovespa
stock index was headed toward its best day in three
weeks, aided also by upbeat earnings from retailer Magazine
Luiza.
Guedes, who is the Brazil government's remaining 'super
minister,' said late on Monday he had the full confidence of
President Jair Bolsonaro. Speculation was rife that political
pressure for more public spending could force him to quit,
sending Brazil markets well into the red on Monday.
The country has seen a slew of ministerial resignations in
the past few months over differences with the administration,
increasing political uncertainty and with it doubts about the
future of reforms in the country.
Lower house speaker Rodrigo Maia on Monday said he is
confident congress will approve tax reform this year.
FX Strategists at Citigroup warn that while Guedes'
assurances that the spending cap will not be breached may calm
markets for the time being, the pressure to increase public
spending will remain high as long as the COVID-19 outbreak
remains uncontrolled.
Brazil had registered 3.4 million cases of the disease and
more than 108,000 related deaths as of Monday.
In Mexico, the peso rose 0.4%, up for the fifth time
in six. The plan to revive the economy from the coronavirus
pandemic would target sectors like construction and energy,
President Andres Manuel Lopez Obrador said on Monday.
Despite falling oil prices, crude exporter Colombia's peso
broke a four-session losing run after officials on Monday
said the United States and Colombia will work together on an
investment initiative of up to $5 billion in private funds for
rural areas over three years.
A surge in copper prices, meanwhile, helped investors look
past a 14.1% plunge in GDP of the red metal's top exporter,
Chile. The country's peso was on track for its best
session in a month as the data showed mining remained a bright
spot, with the industry growing 1.6% despite the pandemic.
Argentina's peso, returned from an extended weekend
to plumb to new lows, even as creditors reaffirmed their support
for the government's amended bond restructuring offer, which was
filed to the U.S. Securities and Exchange Commission on Monday.
Key Latin American stock indexes and currencies at 1431 GMT:
Stock indexes Latest Daily %
change
MSCI Emerging Markets 1103.64 0.33
MSCI LatAm 2000.58 1
Brazil Bovespa 101591.80 2
Mexico IPC 39112.56 -0.44
Chile IPSA 4045.37 0.11
Argentina MerVal 46967.65 -3.255
Colombia COLCAP 1151.44 -0.16
Currencies Latest Daily %
change
Brazil real 5.4578 0.68
Mexico peso 22.1066 0.27
Chile peso 795.5 1.45
Colombia peso 3783.45 -0.08
Peru sol 3.5768 0.03
Argentina peso 89.0000 -17.80
(interbank)
(Reporting by Susan Mathew in Bengaluru;)
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