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EMERGING MARKETS-Latam FX dips as high treasury yields weigh

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* Chile’s peso worst performer * Brazil’s real extends losses from worst session in a month * Colombian peso tracks oil higher * Peru’s sol extend gains; cenbank chief to continue in role (Updates prices) By Ambar Warrick and Susan Mathew Oct 5 (Reuters) – Most Latin American currencies fell on Tuesday as a rise in U.S. Treasury yields pressured high-yielding assets, with Brazil’s real hitting five-month lows. Brazil’s real fell 0.4% after marking its worst day in a month on Monday, as concerns over political instability compounded weak trends in markets. Data on Tuesday showed Brazilian industrial output fell more than expected, hurt especially by weak manufacturing of durable consumer goods. A global semiconductor shortage has also stalled production in the country’s massive automobile sector. “Going forward, the industrial sector is likely to be impacted by tighter financial conditions, lingering supply chain frictions, significantly higher logistical and energy and other input costs, and potentially also energy supply restrictions,” Goldman Sachs analysts wrote in a note. Meanwhile, Brazil’s Economy Minister Paulo Guedes and Central Bank Chief Roberto Campos Neto were invited to testify before the Senate’s economic affairs committee regarding revelations that both have offshore investment vehicles. Most other Latam and emerging market currencies fell as a rise in U.S. Treasury yields narrowed the gap between risky and risk-free debt. Chile’s peso slipped 0.7% to the dollar, tracking a decline in copper prices as concerns over Chinese demand weighed. The currency was the top decliner in Latam. Concerns over China’s property sector, which accounts for about a quarter of the country’s gross domestic product, have also rattled Latam markets given the region’s heavy dependence on China, as an export destination. Sentiment towards emerging market currencies was also dented on Monday after JPMorgan turned “underweight” on them. Mexico’s peso fell 0.4%. Central Bank Deputy Governor Jonathan Heath said the bank would likely hike rates one or two more times as it races to contain a recent spike in inflation. A rate hike earlier this year had supported the peso, given that higher interest rates make the currency attractive for carry trade. Bucking the trend, Colombia’s peso climbed 0.2%, tracking higher oil prices. World’s number two copper producer Peru saw its currency extend gains to a third straight session. The government said central bank chief Julio Velarde will remain in his post for another five-year term, signaling central bank continuity. Meanwhile, Peru’s government said a deal had been struck to avoid road blockades that have threatened production at the huge Las Bambas copper mine. While most stocks in the region tracked global equities higher, the Chilean benchmark slipped 0.6% as material stocks weighed. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 1237.52 0.09 MSCI LatAm 2219.31 0.27 Brazil Bovespa 110861.56 0.42 Mexico IPC 51046.71 0.36 Chile IPSA 4216.14 -0.62 Argentina MerVal 78185.50 0.782 Colombia COLCAP 1387.31 0.4 Currencies Latest Daily % change Brazil real 5.4637 -0.35 Mexico peso 20.5469 -0.33 Chile peso 810.5 -0.57 Colombia peso 3781.03 0.17 Peru sol 4.129 0.05 Argentina peso 98.8900 -0.03 (interbank) (Reporting by Ambar Warrick Editing by Marguerita Choy)



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