Colombian peso jumps, Mexican peso dips after decision

* Mexican central bank hikes key interest rate to 4.5%

* Colombia government to sign $5.39 bln in road contracts

* Fiscal, political concerns weigh on Brazilian real

* Latam equities take a breather, Brazil stocks slide

By Shreyashi Sanyal

Aug 12 (Reuters) - The Colombian peso jumped more than 2% on Thursday, rising for the third straight day, as the country's government said it will sign contracts for new road projects, while Mexico's peso dipped even as its central bank hiked its key lending rate.

Colombia's currency COP= jumped 2.17% to 3,855 against the dollar, clocking its best day since June 2020. Transport Minister Angela Maria Orozco told Reuters that the government will sign contracts for road projects worth 21.3 trillion pesos ($5.39 billion) before its term ends next year.

Analysts consider Colombia's poor highways and delays to modernize them as one of the main factors reducing the competitiveness of the country's economy and its international trade.

A recent rise in oil prices have also boosted the crude exporter's currency.

"We do find select value in the corporate sectors in Peru, Brazil, Colombia and Mexico," Shamaila Khan, head of emerging market debt at AllianceBernstein, told the Reuters Global Markets Forum.

"We favor select commodity credits in these countries that are benefiting from higher commodity prices."

Mexico's peso MXN= fell 0.1% even as the Bank of Mexico raised its key interest rate by 25 basis points to 4.5%, as expected. Its governing board expressed concern about above-target inflation and inflation expectations.

Peru's sol PEN= firmed up to 0.4% before treading water, still dangerously close to all-time lows. Credit Suisse expects the Peruvian central bank to hold the rate unchanged at 0.25%, adding that the bank may prepare markets for a hawkish turn.

Brazil's real BRBY fell 0.6%. Sticking to his hawkish stance, central bank chief Roberto Campos Neto said all measures will be taken to tackle inflation and that markets have started to see the impact of fiscal concerns.

Electricity prices are also a concern as severe drought hits hydropower production. This could constrain medium- and long-term GDP growth to an extent, Citi Research strategists said.

Chile's peso CLP= slipped 0.5% after two unions at Codelco's Andina copper mine said on Wednesday they would walk off the job in less than 24 hours after rejecting the latest contract offer from the state-owned miner.

Latam stocks tracked a global fall in equities, with Sao Paulo's Bovespa .BVSP hit by disappointing earnings.

Conglomerate Ultrapar UGPA3.SA fell on a surprise loss, while financial exchange operator B3 B3SA3.SA and meatpacker JBS JBSS3.SA dropped despite strong results.

In El Salvador, spreads on dollar-denominated bonds hit their highest level since November, with some investors seeing an opportunity as yields flash double-digits across the curve.

Key Latin American stock indexes and currencies at 1909 GMT:

Stock indexes


Daily %

change MSCI Emerging Markets .MSCIEF


-0.58 MSCI LatAm .MILA00000PUS


-0.86 Brazil Bovespa



-0.86 Mexico IPC



-0.43 Chile IPSA



0.21 Argentina MerVal


69015.76 -0.661 Colombia COLCAP






Daily %

change Brazil real



-0.62 Mexico peso



-0.12 Chile peso



-0.57 Colombia peso COP=


2.16 Peru sol



0.13 Argentina peso (interbank) ARS=RASL



Argentina peso (parallel) ARSB=



Reporting by Shreyashi Sanyal and Susan Mathew in Bengaluru; Editing by Sonya Hepinstall

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.