Robust copper prices lift Chile’s peso; Brazil’s currency flat after intervention

Updated at 3:45 p.m. EDT/1945 GMT

By Bansari Mayur Kamdar

April 2 (Reuters) –The Chilean peso rose on Tuesday, boosted by strong copper prices ahead of an expected by 75 basis-point interest rate cut, while Brazil’s real gave up initial gains after the central bank intervened in the foreign exchange market.

The currency of the world’s largest copper producer, Chile CLP=, rose 1% against the greenback.

Strong factory data from China and plans to cut production by smelters in the top consumer triggered buying, boosting the red metal’s prices and offsetting the resilient dollar.

Investors awaited the central bank’s rate decision later in the day, with Chilean policymakers expected to cut the benchmark interest rate to 6.50%.

“With inflation around target, inflation expectations anchored at 3%, and the output gap closed, we expect the MPC (Monetary Policy Committee) to maintain their guidance for the policy rate to reach its neutral level in the second half of 2024,” economists at Goldman Sachs wrote.

Meanwhile, Brazil’s real BRBY strengthened as much as 0.67% against the dollar after the central bank intervened in the foreign exchange market through an additional auction of swap contracts. The real later pared gains and was about flat on the day.

The intervention, announced late on Monday, was thought by some market participants to meet demand created by the redemption of a dollar-linked bond while others cited a need to boost the real.

The Chilean peso has fallen nearly 10% so far this year and is among the worst-performing currencies in the region. The real is down over 4% year-to-date and trading at its weakest level since October 2023.

Chile’s stock market IPSA .SPIPSA was flat after hitting a record high in the previous session.

The MSCI’s index for Latin American currencies .MILA00000CUS advanced 0.2%, while stocks .MILA00000PUS gained 0.6%.

Mexico’s peso MXN= gained 0.3%, while Colombia’s COP= peso climbed 1.1% to its highest level since December against the dollar, supported by firm crude prices on supply concerns after Ukrainian attacks on Russian energy facilities and the escalating conflict in the Middle East.

Shares of Brazilian energy firm Enauta slipped more than 10% ENAT3.SA after the company presented an offer to combine with fellow oil firm 3R Petroleum RRRP3.SA. 3R shares rose 1.5%.

Elsewhere, Fitch Ratings maintained Israel’s “A+” sovereign credit rating and removed the country from “rating watch negative” but said the war in Gaza remained a risk.

Argentina’s currency market, as well as its stock, bond and grain markets, remained closed for Veteran’s Day.

HIGHLIGHTS

** Egyptian President Abdel Fattah al-Sisi sworn in for third term

** Brazil central bank asks government for 20% budget increase this year

** Brazil’s producer price index rose 0.06% in February

Key Latin American stock indexes and currencies at 1945 GMT:

Reporting by Bansari Mayur Kamdar in Bengaluru
Editing by Devika Syamnath and Matthew Lewis