Mexican peso leads Latam FX higher as Omicron concern ebbs

Dec 28 (Reuters) – Most Latin American currencies steadied on Tuesday, supported by an easing of concerns about the Omicron variant and a calmer dollar, while Mexico’s peso led gains as the country’s stock index hit record highs.

MSCI’s index of Latin American currencies (.MILA00000CUS) inched 0.3% higher, in a fifth consecutive session of gains.

Latam currencies are set to end December higher after dropping for three consecutive months. Strong commodity prices, waning Omicron worries and hawkish central bank decisions to curb rising inflation pressures have all helped emerging market currencies in the region.

Global markets rose, buoyed by another record-setting day on Wall Street and after Britain and France held off from imposing more COVID curbs before the year-end.

“The good news is that the global economy is on track to extend and entrench recovery; as re-opening of borders fires up tourism-related multipliers and scope for de-congestion of supply-chains greases industrial activity. But the recovery path is likely to be bumpy,” analysts at Mizuho Bank wrote in a note.

The currency of oil-exporting Mexico gained 0.5%, tracking strong gains in crude oil prices, which are around the $80 per barrel mark. The peso is on-track to be the best performing currency among its Latin American peers this month, up nearly 4%.

Mexican stocks (.MXX) rose 0.6% to an all-time high.

Brazil’s real , was flat after the jobless rate (BRPNAD=ECI) fell more than expected to 12.1% in the three months through October, statistics agency IBGE said, signaling an improving economy.

Economy Ministry officials have forecast that a rebounding labor market will strengthen the economy next year, but market economists are trimming their 2022 growth outlooks because of sharp increases to interest rates in response to double-digit inflation.

Brazilian stocks dropped 0.6%, with miner Vale (VALE3.SA) the biggest drag on the index. A group representing two-thirds of bondholders in Brazilian miner Samarco, a joint venture between BHP Group (BHP.AX) and Vale, rejected a restructuring offer put forward by the company, though both sides are expected to offer fresh proposals. read more

Other Latin American currencies including the Chilean peso steadied, while the Colombian and Argentine pesos and the Peruvian sol eased between 0.1% and 0.4%.

Key Latin American stock indexes and currencies at 1450 GMT:

Reporting by Shashank Nayar in Bengaluru; editing by Barbara Lewis

Our Standards: The Thomson Reuters Trust Principles.