EMERGING MARKETS-Chilean peso set for best month ever; Brazil's real slips

    * Chilean peso bests regional peers with 8.6% jump in July
    * Colombia cuts interest rate, sees steeper economic
    * Brazil's real pressured by record deficit, debt figures
    * Colombia's peso lags in July on oil price outlook

 (Updates Prices)
    By Shreyashi Sanyal and Susan Mathew
    July 31 (Reuters) - Chile's peso rose on Friday and was set
for its best month on record, aided by improving signs of demand
for copper from top consumer China, while the Brazilian real
weakened after central bank figures showed a record rise in
national debt. 
    The peso gained 0.6% and outperformed its regional
peers with an 8.6% jump in July. Prices of copper, Chile's
biggest export, ticked higher after strong factory activity data
from China. 
    Prolonged lockdown restrictions in Chile have also helped 
contain the spread of the novel coronavirus in the country. 
    Capital Economics analysts say Chile is seeing the fastest
decline in new per capita coronavirus cases of any major
emerging market.
    "If this trend continues, the drag from cautious household
behavior may fade more quickly in Chile than elsewhere in the
    MSCI's index for Latin American currencies
rose 5% in July, set for its biggest monthly gain in 2020 after
the dollar tracked its worst month in a decade, on doubts
over a U.S. economic rebound as the country struggles to contain
its coronavirus outbreak.
    Colombia's peso dropped after the central bank cut
Colombia's interest rate by 25% as expected, and now expects
gross domestic product to contract between 6% and 10% this year,
worse than a previous range of 2% to 7%.
    The currency lagged its regional peers in July, hit by a
worsening outlook for oil prices tied to a decline in demand
from the United States.
    Brazil's real fell 1% after the country's national
debt rose to a record 85.5% of gross domestic product and the
public sector registered a record $36.5 billion primary deficit
in June. 
    Latin America's biggest economy's currency was still set for
a monthly gain of nearly 5%, with investors keeping a close eye
around developments on a new tax reform. 
    Economy ministry estimates say the creation of a new
value-added tax in Brazil by combining two federal taxes paid by
companies could generate up to 373,000 jobs.
    The Mexican peso continued to decline for the second
straight day, after data showed the economy shrunk by a
record-breaking 17.3% during the second quarter. The currency
was still up for the month.
    Except Mexico's Ipc, most major stock indexes in the
region rose this month as hopes of a COVID-19 vaccine and ample
global stimulus drove hopes of an economic recovery. 
    On Friday, however, most indices fell with Brazil's Bovespa
 set for its worst day in over a month. 
    Key Latin American stock indexes and currencies at 1846 GMT:
  Stock indexes           Latest   Daily %
 MSCI Emerging Markets    1077.30    -0.44
 MSCI LatAm               2059.29    -2.03
 Brazil Bovespa         102857.64    -2.05
 Mexico IPC              36774.44    -0.98
 Chile IPSA               3963.37     0.25
 Argentina MerVal        49318.00   -0.178
 Colombia COLCAP          1151.75    -1.11
      Currencies          Latest   Daily %
 Brazil real               5.2103    -1.03
 Mexico peso              22.2130    -0.94
 Chile peso                 756.9     0.53
 Colombia peso            3731.91    -0.29
 Peru sol                  3.5317    -0.56
 Argentina peso           72.3100    -0.07

 (Reporting by Shreyashi Sanyal in Bengaluru
Editing by Paul Simao and Jonathan Oatis)

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