* Real also pressured by anti-government protests
* Brazilian stocks slump over 1%
* Colombian peso extends gains post-rate hike
By Ambar Warrick
Oct 4 (Reuters) - Brazil's real led losses across Latin
American currencies on Monday as regional units tracked a
broader decline in emerging markets on concerns over the Chinese
economy and rising Treasury yields.
The real sank 0.8% to 5.4137 against the dollar, with
political uncertainty also coming into play after
anti-government demonstrations broke out in major capitals over
the weekend.
Amid growing discontent with President Jair Bolsonaro's
administration, a potential change of government next year could
also result in sudden changes to fiscal policy. The government
is already struggling with stretched fiscal spending due to the
COVID-19 pandemic.
"The window to pass quality reforms that would contribute to
increased productivity and longer-term growth is closing,
leaving the government scrambling to find ways to finance its
re-election campaign," Wilson Ferrarezi, economist, Brazil
Research at TS Lombard, wrote in a note.
A rise in U.S. Treasury yields weighed on most emerging
market assets, as the gap between risky and risk-free debt
narrowed.
Mexico's peso sank 0.6% despite a slight uptick in
consumer confidence, while Chile's peso fell 0.3%.
The U.S. dollar benefited from safe haven demand as reports
said China's second-largest property developer, Evergrande
, was considering a $5 billion asset sale to fund its
debt repayment.
Evergrande's debt uncertainty, coupled with a slew of weak
Chinese economic data last month, has brewed concerns about
slowing economic growth in China, which in turn could spill over
to several emerging economies that are exposed to the country.
Latin America, for instance, is a major exporter of raw
materials to China, and is likely to be impacted by a slowdown.
Colombia's peso rose 0.2%, extending gains into a
third session after an interest rate hike by the central bank
last week.
The bank raised lending rates for the first time in a year
as it seeks to control inflation. Rate hikes have been a common
occurrence across the globe this year, with inflation rising on
high commodity prices and easy monetary policy.
Colombian stocks jumped 0.8% to an eight-month
high.
Brazilian stocks slipped more than 1%.
Key Latin American stock indexes and currencies:
Latest Daily % change
MSCI Emerging Markets 1239.08 -0.6
MSCI LatAm 2238.84 -1.01
Brazil Bovespa 111502.33 -1.24
Mexico IPC 51350.84 0.57
Chile IPSA 4284.66 -0.97
Argentina MerVal - -
Colombia COLCAP 1382.58 0.9 Currencies Latest Daily % change
Brazil real 5.4137 -0.83
Mexico peso 20.5514 -0.60
Chile peso 805.5 -0.31
Colombia peso 3781.15 0.17
Peru sol 4.121 0.08
Argentina peso 98.8800 -0.08
(interbank)
(Reporting by Ambar Warrick
Editing by Mark Heinrich)
