The real eyes of Brazil, the best year since 2016

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The Brazilian real strengthened on Thursday, the

course for its best annual performance since 2016 while

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commodity prices outweighed fiscal spending concerns

the new government and place the currency among the best emerging markets

performers in 2022.

The commodity exporter’s currency rose 0.1% to 5.25

per dollar in its last trading session of the year. He touched

a session high of 5.19 earlier.

The Mexican peso and the Chilean peso gained

around 0.6% each against a much weaker dollar, investors

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closely monitored the surge in COVID cases in China and the data

showed that weekly jobless claims in the United States rose slightly last week.

The real has climbed around 6.4% against the dollar this year

vs. 4.3% decline in MSCI developing world

currency index, battered by a stronger dollar

and runaway inflation following the Russian invasion of

Ukraine and the post-pandemic rebound.

While the real was aided by one of the most aggressive

tightening of cycles in the world, concerns for Brazilian public opinion

finance and health have come to the fore since President-elect Luiz

Inacio Lula da Silva has pledged to spend more on the economy and

welfare after his election victory in October.

Lula announced a final batch of 16 cabinets on Thursday

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members before his inauguration on 1 January.

“High commodity prices, high double-digit inflation and the

economic recovery after the strong contraction linked to Covid

have reduced short-term fiscal risk,” Alberto Ramos, Director

Latin American research at Goldman Sachs, wrote in a note.

« But the high level of public debt (stock) leaves the budget

situation and the economy as a whole, vulnerable to

and external shocks.

Previous data showed that the Brazilian public sector had displayed its

biggest primary deficit for November in six years, driven by

negative results of the central government but also by a

deterioration of state and municipal finances.

Sao Paulo shares were almost flat on Thursday but

looked poised for 5% annual gains, outperforming the MSCI

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The LatAm equity index, up just 1.4% over a

since the beginning of the year.

However, regional markets have overshadowed broader emerging markets

the equity index, down nearly 22% this year.

Major stock indices and currencies in Latin America:

Last Daily %


MSCI Emerging Markets 957.87 -0.24

MSCI Latin America 2160.55 0.46

Brazil Bovespa 110238.25 0

Mexico IPC 49803.57 0.31

Chile IPSA 5243.32 0.53

Argentina MerVal 205423.84 1.414

Colombia COLCAP 1275.18 0.68

Currencies Last Daily %


Brazilian real 5.2472 0.10

Mexican peso 19.3125 0.56

Chilean peso 856.8 0.60

Colombian peso 4835.57 -1.36

Peru Sol 3.8073 -0.24

Argentine Peso (interbank) 176.7400 -0.20

(Reporting by Sruthi Shankar in Bengaluru)



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