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Montevideo, August 16th 2018 - 14:00 UTC

Brazil and Argentina markets hit by domestic and overseas uncertainties

Friday, August 10th 2018 - 06:51 UTC
Full article 60 comments
Chinese state media accused the United States of having a “mobster mentality,” and WTO indicated global trade in goods is likely to lose momentum in the 3Q Chinese state media accused the United States of having a “mobster mentality,” and WTO indicated global trade in goods is likely to lose momentum in the 3Q
Argentina's country risk shot 3.9% reaching 633 points, highest in 37 months, and in equities, the Merval index was up, 1.11% after falling 8.71% in the week Argentina's country risk shot 3.9% reaching 633 points, highest in 37 months, and in equities, the Merval index was up, 1.11% after falling 8.71% in the week
Brazil's Real was especially hard hit, after two polls showed right-wing populist Jair Bolsonaro tying with market-friendly Geraldo Alckmin in key state of Sao Paulo Brazil's Real was especially hard hit, after two polls showed right-wing populist Jair Bolsonaro tying with market-friendly Geraldo Alckmin in key state of Sao Paulo

Major Latin American currencies fell against the dollar on Thursday as global trade tensions strengthened the greenback and political uncertainty in Brazil and Argentina. Latin America's largest economy heads into a presidential election in two months time and in Argentina a major corruption scandal is unfolding.

 The dollar gained against most currencies as investors bet that trade war posturing and a strong U.S. economy would continue to aid the currency. Trade tensions are seen as beneficial for the U.S. dollar as the United States is better placed then emerging markets to deal with protectionism, and tariffs may narrow the U.S. trade deficit.

Late on Wednesday, Chinese state media accused the United States of having a “mobster mentality,” while a key World Trade Organization metric on Thursday indicated that global trade in goods is likely to lose momentum in the third quarter.

Brazil's real currency was especially hard hit, after two polls showed right-wing populist Jair Bolsonaro tying with market-friendly centrist Geraldo Alckmin in the key state of Sao Paulo ahead of the October presidential election.

Traders were also spooked by a Supreme Court decision increasing some government salaries by over 16% in 2019.

“Apparently, the powers that be do not understand the seriousness of Brazil's fiscal situation,” said Alvaro Bandeira, head economist at brokerage Home Broker Moda Mais.

Brazil's real fell 0.95% in trade, while the Mexican Peso was off 0.98% and the Chilean peso slipped a more modest 0.26%.

In Argentina the interbank dollar climbed 48 cents and reached 28.71 Pesos, because of growing uncertainty and instability concerns both overseas and in the country.

According to Buenos Aires analysts the demand was speared by the political turmoil surrounding the “bribe notebooks”, which exposed and involves the main public works contractors and political officials from a former administration.

Likewise, in this scenario, Argentina's country risk shot 3.9% reaching 633 points, the highest in 37 months.

In equities markets, the biggest major mover was Argentina's benchmark Merval index, which rose 1.11% after the unfolding corruption probe there hit the index hard in recent sessions. The index fell 8.71% Monday through Wednesday. Brazil's Bovespa was down 0.44%.

 

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  • Chicureo

    Every I read one of Enrique Massot's posts, I'm reminded of dog vomit...

    Our Argentine brothers have experienced an economic roller coaster from being one of the wealthiest countries in the world to near bankruptcy on several occasions...
    Argentina, Brazil, Chile's (and sadly the rest of Latin America) economic difficulties have ALL been victims of previous administrations gross mismanagement. (Currently, Venezuela is the most unfortunate example.)

    We in Chile especially suffered from our Socialist-Marxist experiment during the administration of Salvador Allende. In 1974 our country was broke and only because we embraced three decades of painful free market reforms, did our re-emerging democracy was finally able to emerge as the success it is today.

    Enrique would prefer us to extol the virtues of both Cristina and Lula. Both corrupt and clearly guilty of looting their country's wealth.

    Posted 5 days ago +2
  • Chicureo

    Argentina and Brazil's economic difficulties are clearly victims of previous administrations gross mismanagement, yet our Socialist-Marxist expert Enrique Massot insists on defending Lula and Cristina which is more proof to us living in an age of expert idiots... I'm reminded of the sentence from Proverbs 26:11: “As a dog returneth to his vomit, so a fool returneth to his folly.”

    Posted 5 days ago +1
  • Terence Hill

    Chicureo aka “the hustler”
    “banging on their pots...truck drivers going on strike” all as result of one major contributor the US in breach of international law. In paying for the strike and participating in the overthrowing of a legitimate democratically elected government. But don't worry, they have done the same in numerous other Latin American countries. They can always find traitors for the right price to do their bidding.

    Posted 4 days ago +1
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