Brazil’s real rises after intervention

Colombia c.bank’s December policy meeting minutes due * Latam FX up 0.3%, stocks add 0.1% By Shashwat Chauhan Dec 26 (Reuters) – Most Latin American currencies were broadly stable in holiday-thinned trade on Thursday, though Brazil’s real advanced against the dollar after its central bank intervened in the forex market to support the sliding currency.

Brazil’s Real gained 0.5% against the dollar after its central bank sold $3 billion in a spot auction, extending a series of interventions in the foreign exchange market amid a greenback outflow from Latin America’s largest economy.

The real hovers near all-time lows hit earlier this month in the face of a stronger dollar and a deepening financial crisis sparked by fiscal policy concerns. Most markets reopened after the Christmas break, though volumes were expected to be low heading into the new year.

Mexico’s peso held firm at 20.14 per dollar, while Chile’s peso weakened 0.2% in light volumes. In Colombia, minutes from its central bank’s last policy meeting, where it cut rates by a smaller-than-anticipated 25 basis points, are due later in the day.

“We expect the minutes to echo the post-meeting message about the importance of a cautious cutting cycle to minimize the risks of derailing the disinflation process, while acknowledging that there is room to dial back the still elevated level of policy restraint,” Goldman Sachs economists wrote in a note.

On Tuesday, Mexican central bank deputy governor Jonathan Heath told Reuters that the central bank’s board could discuss a rate cut of either 25 basis points or 50 basis points in its next decision in February. MSCI’s index for Latin American currencies was gained 0.3%, while a gauge for stocks inched 0.1% up. Both MSCI’s Latin American broader stock and currency indexes are set for steep yearly losses – almost 30% and 10.5%, respectively – lagging broader EM assets, as many regional central banks grapple with rising inflation.

The outlook for 2025 is also likely to be challenging with persistently high U.S. rates hitting demand for emerging market assets, with the threat of broad global tariffs from U.S. President-elect Donald Trump’s administration also likely to weigh.

Elsewhere in emerging markets, Turkey’s central bank cut its key interest rate by 250 basis points to 47.5%, a bit more than expected. The Russian central bank said it will cut its net forex sales by almost 60% in the first working week of 2025, withdrawing some support for the rouble, which weakened slightly in response, but remained at around 100 to the U.S. dollar.

(Reporting by Shashwat Chauhan in Bengaluru; Editing by Alistair Bell)
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