The Brazilian real fell in the first
trading session of the year after Luiz Inacio Lula da Silva was
sworn in as Brazil’s president, while stocks in Latin America’s
largest economy fell with state-run oil company Petrobras
The real fell 1.1% against the dollar in thin trading
on Monday, a federal holiday in the United States.
At his swearing in, Lula delivered a searing indictment of
far-right former leader Jair Bolsonaro, who left Brazil for the
United States on Friday after refusing to concede defeat. Lula
also vowed a drastic change of course to rescue a nation plagued
by hunger, poverty and racism.
His speech highlighted his vision of a growth-inducing state
and also criticized the spending ceiling and labor reform, said
Guide Investimentos in a note to clients.
Finance Minister Fernando Haddad said Lula’s government will
not accept the “absurd” 220 billion-real ($41.19 billion)
primary deficit forecast in this year’s budget, indicating it
will work to make it smaller.
The real was the best-performing currency in the region in
2022 but gains were limited as concerns about fiscal spending
under the new government offset surging commodity prices.
“We still believe the Fed will remain hawkish, the USD holds
its safe haven status while transition to a new government will
feed defensive positions,” said analysts at Rabobank in a recent
Sao Paulo’s stocks dropped 3.1%, with financials and
energy stocks weighing on the index.
Brazil’s state-run oil company, Petrobras, slid 5.7% after
Lula signed a decree on Sunday extending for 60 days an
exemption for fuels from federal taxes, a measure passed by his
predecessor aimed at lowering their cost.
Petrobras’ incoming chief executive said on Friday he
planned to tweak the country’s fuel price policy, but said
investors need not worry.
The Mexican peso slipped 0.1% against a firm dollar.
Peru’s sol was subdued after data showed the
country’s inflation rate rose 0.79% in December and reached
8.46% for 2022, the highest annual measurement in the past 26
Chilean markets were closed on Monday.
Elsewhere in the emerging markets, South Africa’s rand
edged up 0.2%.
In central and eastern Europe, Hungary’s forint
eased slightly, while its peers edged higher as investors
assessed 2023 prospects after a tumultuous 2022 when inflation
soared to double digits, and central banks ramped up interest
Key Latin American stock indexes and currencies at 1522 GMT:
Stock indexes Latest Daily %
MSCI Emerging Markets 954.64 -0.18
MSCI LatAm 2074.96 -2.51
Brazil Bovespa 106252.84 -3.17
Mexico IPC 48734.04 0.56
Argentina MerVal 204650.31 1.269
Colombia COLCAP 1281.49 -0.36
Currencies Latest Daily %
Brazil real 5.3510 -1.34
Mexico peso 19.5000 -0.13
Colombia peso 4847 0.00
Peru sol 3.805 -0.05
Argentina peso (interbank) 178.0500 -0.51
Argentina peso (parallel) 338 2.37
(Reporting by Bansari Mayur Kamdar in Bengaluru; Additional
reporting by Paula Arend Laier
Editing by Matthew Lewis)