Argentine assets spike on Milei's reform bill win; Mexican peso jumps
Brazil's retail sales rise below estimates in April
Chile c.bank to cut interest rate to 5.75% in June -poll
Peru interest rate decision due
By Ankika Biswas
June 13 (Reuters) - Argentine assets rallied on Thursday, as investors drew comfort from the Senate's passing of President Javier Milei's economic reform bill, while Mexico's peso jumped 1% against the dollar in otherwise weak Latin American currency trading.
Argentina's Senate approved a sprawling bill on late Wednesday, key to the libertarian president's economic reform plans. Protesters set fires and clashed with police in the streets outside Congress.
The country's international dollar-denominated bonds gained across the curve, with the 2029 maturity 040114HX1=1M enjoying the biggest gains, up 2.86 cents to be bid at 57.86, MarketAxess data showed, also boosted by Argentina and China renewing the activated part of a major currency swap line of $5 billion through July 2026.
The Argentine peso ARSB= also jumped 5.3% to 1,220 per dollar in the parallel black market, while the benchmark stock index .MERV soared 4%.
Senators are set to vote on each article of Milei's package designed to boost investment by privatizing state entities and providing incentives for businesses.
"The approval marks a bittersweet win for Milei's administration with approval of a bill that has been six months in the working but has been constantly diluted in the process," Citi analysts said in a note.
"The administration continues making progress on the legislative front despite a lack of representation in Senate; we remain overweight Argentina credit."
Investors also eyed inflation data out of Argentina later in the day.
The Mexican peso MXN=D2 strengthened 1% against the dollar after dropping to a near three-month low in the previous day.
The peso, among the world's best performing EM currencies, has been dragged down by the ruling party coalition dominating in general elections, emboldening politicians to pursue controversial reforms to the constitution.
The Bank of Mexico's governor Victoria Rodriguez said the central bank is monitoring the recent volatility in domestic financial markets, and could act to restore order in the event of "atypical" or "extreme" behavior.
Weakness in most Latam currencies was also due to a firm dollar index =USD after the Federal Reserve adopted a hawkish tone on Wednesday andpushed out the start of rate cuts to perhaps as late as December.
The currency of the world's largest copper producer, Chile's peso, CLP=CL slipped 0.1%, hurt by weak prices of the red metal.
Chile's central bank is expected to lower its benchmark interest rate by 25 basis points at next week's monetary policy meeting, a poll of traders by the bank showed.
The Colombian peso COP= also shed 0.7% against the dollar, falling for the third day and touching its lowest level since late November. Investors awaited the country's retail sales data later in the day.
Peru's interest rate decision during the day was also on investors' watch list. The sol PEN=PE dropped 0.3% on the day, also hurt by weak copper prices.
Data showed Brazil's retail sales volumes in April rose less than expected, but still hitting a fresh all-time high. The real BRL= was largely unchanged against the dollar.
Key Latin American stock indexes and currencies:
Stock indexes | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1077.08 | 0.8 |
MSCI LatAm .MILA00000PUS | 2174.50 | 0.52 |
Brazil Bovespa .BVSP | 120100.68 | 0.14 |
Mexico IPC .MXX | 52929.36 | -0.17 |
Chile IPSA .SPIPSA | 6536.71 | 0.02 |
Argentina MerVal .MERV | 1623744.85 | 3.68 |
Colombia COLCAP .COLCAP | 1382.32 | 0.11 |
Currencies | Latest | Daily % change |
Brazil real BRBY | 5.4061 | -0.04 |
Mexico peso MXN=D2 | 18.5380 | 1.04 |
Chile peso CLP=CL | 918.7 | -0.25 |
Colombia peso COP= | 4048.72 | -0.70 |
Peru sol PEN=PE | 3.77 | -0.34 |
Argentina peso (interbank) ARS=RASL | 902.5000 | -0.06 |
Argentina peso (parallel) ARSB= | 1265 | 2.37 |
Reporting by Ankika Biswas in Bengaluru; editing by Mark Heinrich
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