Latin American currencies decline, tracking falling commodity prices

Updated at 3:30 p.m. EDT/1930 GMT

By Johann M Cherian and Shashwat Chauhan

July 23 (Reuters) –Most currencies in resource-rich Latin America slipped on Tuesday, tracking weakness in commodities prices, while investor jitters about the outcome of U.S. elections later this year and the absence of major economic data kept risk appetite in check.

The Mexican peso MXN= led losses with a 1.3% decline, ahead of an inflation report in the oil exporting nation later in the week, as crude prices slipped for a third consecutive session on growing expectations of a ceasefire in Gaza, which could abate worries about supply disruptions from the region. O/R

Investors also were paying attention to uncertainty around the U.S. election campaign and thepossible repercussions the results couldhave on security, trade and immigration between the U.S. and Mexico. In the wake of President Joe Biden’s decision to end his reelection campaign, Vice President Kamala Harris has emerged as the Democrats’ candidate to face off against former President Donald Trump in theNov. 5 vote.

“Harris stepping up as Democrats’ presidential nominee has lowered the odds of a … (Republican) sweep. Yet, many are wondering if the Trump trade has started to hit markets and what are the signs,” strategists at TD Securities wrote in a note.

Colombia’s peso COP= also weakened 0.5%, while Chile’s peso CLP= slipped 0.7%, as copper prices extended losses to hit their lowest levels in three and a half months on growing concern over demand in top consumer China. MET/L

Brazil’s real BRL= pared initial gains and was last down 0.2% to 5.59 per dollar.

Brazil’s government on Mondaywidened its primary deficit forecast for this year to 32.6 billion reais ($5.9 billion), prompting a spending freeze to meet the fiscal target.

The real is the top underperformer among major currencies in the region after fears of excessive spending and interference with central bank independence sparked a selloff towards the end of the second quarter.

MSCI’s gauge for regional bourses .MILA00000PUS slipped 1.6%, with Brazil’s Bovespa .BVSP falling 1%, weighed down by a drop in shares of consumer discretionary and materials companies.

Vale VALE3.SA fell 1.5%. The mining giant’s copper and nickel spin-off Vale Base Metals said it has picked Shaun Usmar as its new CEO.

Telefonica Brasil VIVT4.SA lost 1.6% after the firm said its TCloud unit signed a deal to buy cloud service firms IPNET and IPNET USA for up to 230 million reais ($41.29 million).

Mexico’s main index .MXX dropped0.4%, with Grupo Mexico GMEXICOB.MX falling 1.3%. The mining and transport conglomerate reported a 34% increase in second-quarter net profit.

Markets in Peru were shut for a public holiday.

Nigeria’s central bank raised its benchmark interest rate to 26.75%, whileTurkey’s central bank held its policy interest rate steady at 50%.

Hungary’s central bank , on the other hand, delivered its fifteenth successive rate cut, bringing the base rate down to 6.75%.

Key Latin American stock indexes and currencies:

Reporting by Johann M Cherian and Shashwat Chauhan in Bengaluru; Editing by Paul Simao