EMERGING MARKETS-Brazilian real leads gains among Latam FX.

Reuters

Susan Mathew, Shreyashi  Senyal

Brazil's real rose against the dollar on
Thursday, while most other currencies in Latin America steadied
after declines earlier in the session as the dollar edged lower.
 
    Brazil's real rose 1.3%, putting it on course to mark
the biggest weekly gain among major Latam peers.
    A survey on Thursday showed Brazilian industrial confidence
rose in May, the first rise in five months. But separate data
showed unemployment hit a historic high of 14.7% in the quarter
to March.
    "BRL poses an interesting risk-reward profile, but real
yield levels remain relatively low for now," said FX strategists
at TD Securities. 
    The dollar remained subdued against the backdrop of easing
inflation fears keeping monetary policy accommodative,
benefiting riskier currencies. But with talk of tapering rising,
investors kept their eyes peeled for even the slightest mention
of a shift in policy.
    Chile's peso rose more than half a percent as copper
prices rose. The currency had posted its best session in almost
two weeks on Wednesday after the copper price was lifted by
workers threatening to strike at the world's biggest copper
mine, Escondida.
    Currencies in the region came under pressure earlier in the
session as U.S. Treasuries yields rose after the New York Times
reported President Joe Biden will announce on Friday what
analysts said could be the largest spending since World War 1.

    Peru's sol edged higher but hovered near all-time
lows with all eyes on the final round of the presidential
election race between two polarized candidates - the latest in a
string of political risk events haunting investors in Latin
America, a region struggling to keep up with its global peers
despite a commodities boom.
    Falling oil prices on the possible return of Iranian supply
kept Mexico's peso pressured.    
    Stocks in Sao Paulo rose 0.2%, inching closer to
January highs, while Chilean stocks climbed nearly 1%.
    Emerging market stocks have maintained a slower pace of
recovery from the pandemic when compared to more developed
economies.     
    The MSCI's index for emerging market stocks rose
0.2%, while the index for Latin American equities
 added 1%. 
    "We forecast that emerging market equities will make further
gains between now and end-2022 as the global economy recovers
further," said Simona Gambarini, markets economist at Capital
Economics. 
    "However, they have lost a bit of ground to developed market
(DM) equities recently and we doubt they will perform much
better than them in the coming year and a half."

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