Emerging Markets – Brazil’s Real Criticized, Colombia Looks to Weekend Election

* The Brazilian real falls for the third week in a row * Colombian presidential election on Sunday * The Brazilian-Peruvian real outperforms the Colombian peso only for the week (prices and details updates) By Shrishi Sanyal and Pansari Mayor Kamdar June 17 (Reuters) – The Brazilian real fell on Friday in front of it. A steady dollar, tracking its third weekly decline, while the Colombian peso fell ahead of the weekend’s presidential election as citizens will choose between a left-wing businessman and an eccentric. The peso fell 0.2 percent as Colombians prepared to vote on their next president on Sunday, choosing between leftist Gustavo Petro, who promised social reforms, and businessman Rodolfo Hernandez, who campaigned against corruption despite facing a corruption investigation. He denies the charges. Opinion polls indicate that this is the closest election in Colombia’s recent history. “Sunday’s election should be tight, although we think Hernandez has a slight advantage,” Citi strategists wrote in a client note. “The COP traded better against its peers than Latin American currencies in the elections, in part due to supportive flows and higher oil prices. However, prices look high.” The peso rose 1.1% over the week, and Peru’s sol added 1.5% – making them the only two major currencies in Latin America that are trading higher on a weekly basis. Emerging markets have come under pressure from violent monetary tightening from developed world economies, with the US Federal Reserve making its largest policy rate increase in more than a quarter century to tackle severe inflation. Concerns also mounted about whether such large interest rate increases could push the US economy into recession, while China, the world’s second-largest economy, re-imposed strict lockdown measures. High interest rates in the developed world are dulling emerging market assets, especially with a stronger US dollar that will make debt repayment difficult. Default swaps have reached alarming levels for particular countries such as Egypt, Pakistan, Tunisia, Kenya and Turkey. The MSCI Latin American Currencies Index is down 0.6% on the day and 2% for the week, and its peer stocks are tracking a weekly decline of 6.4%. The Brazilian real fell 1.3% as local traders returned from a public holiday to a global bout of risk aversion. The coin targeted its third consecutive weekly decline, posting a 2.6% drop. The central bank of Latin America’s largest economy on Wednesday raised interest rates by 50 basis points, in line with prevailing market expectations, and signaled another increase coming in the world’s most aggressive rate-raising cycle. Shares in Brazil’s Petrobras fell 9 percent after it said it plans to raise fuel prices from Saturday as the country grapples with rising inflation ahead of elections later this year. The Mexican peso rose, while the Chilean peso fell 1%. Meanwhile, Peru’s central bank said it had cut its growth forecast for 2022 to 3.1% from 3.4% previously amid global economic volatility and the recent turmoil in mining activity in the Andean country. Mars was dim. Major stock indices and currencies in Latin America at 1846 GMT: Stock indices latest daily change in emerging markets MSCI 1005.09 -0.3 MSCI LatAm 2100.56 -2.21 Brazil Bovespa 99089.98 -3.62 Mexico IPC 47914.50 0.75 Chile IPSA 5103.24 1.43 Argentina MerVal 87060.90 -1.588 Colombia COLCAP 1460.19 – 0.88 Currencies Latest Daily Percentage Change in Brazil Real 5.1183 -1.78 Mexican Peso 20.3330 0.33 Chilean Peso 876.4 -1.15 Colombian Peso 3897.94 -0.18 Peru Sol 3.7176 -0.54 Argentine Peso (Interbank) 122.9100 -0.17 Argentine Peso (parallel) 213 1. (Reporting by Shreyachi Sanyal) and Bansari Mayor Kamdar in Bengaluru; Editing by Alison Williams)