Brazilian Real weakens due to unrest

01/09/2023

2 minutes read

2023.01.09 15:32

Brazil currency trims losses after initial shock from capital riots
Brazilian Real weakens due to unrest

By Kristina Sobol

Budrigannews.com – After supporters of former President Jair Bolsonaro stormed the capital on Monday, Brazil’s currency fell but was not below its session low. Meanwhile, Chile’s peso reached seven-month highs due to an increase in prices.

Days after President Luiz Inacio Lula da Silva was sworn in following a close election victory in October, supporters of the far-right Bolsonaro invaded and defaced the country’s Congress, presidential palace, and Supreme Court in Brasilia. Protests continued on Monday.

After falling more than 1% earlier in the day, Brazil’s real ended a three-day winning streak, closing down 0.4 percent. As oil prices rose, shares of the state-owned oil major Petrobras erased a portion of their 2% session losses to last trade down 0.2 percent.

As authorities attempt to contain the protests, analysts anticipate that the unrest and its impact on markets will be brief, with the focus soon shifting back on macroeconomic indicators.

“The market impact has been limited as a result of the swift response from the government.” However, Elizabeth Johnson, managing director of Brazil research at TS Lombard, stated, “The riots could slow the reform agenda and reduce pressure on Lula to present an economic plan in the coming weeks.”

On Monday, a survey conducted by the central bank revealed an increase in expectations for Brazil’s annual interest rate and inflation.

Chile’s peso rose 0.8% as copper prices reached six-month highs, while the majority of other Latin American currencies also fell, outperforming broader peers from emerging markets. MET/L] According to data, Chile had a $1.85 billion monthly trade surplus, up from a $417 million surplus in December 2021.

The peso lost ground in Mexico, ending a five-day winning streak and falling from over a month’s highs.

Mexico’s headline inflation ended 2022 a little lower than analysts expected, according to the data, while core inflation appeared to have slowed down. In December, headline inflation reached 7.82 percent, a moderate increase from 7.80 percent in November.

More Fed to raise rates above 5%-Daly

Economy Minister Sergio Massa said on Sunday that Argentina’s economy will grow significantly more than 5% in 2023.

At 1942 GMT, the primary stock indices and currencies of Latin America included:

Stock indexes Latest Daily %

change

1015.45 2.71

MSCI LatAm 2196.64 0.68

Brazil 109614.47 0.6

Mexico IPC 52207.70 0.92

Chile IPSA 5157.00 0.4

Argentina MerVal 215813.64 0.945

Colombia COLCAP 1326.74 0.61