EMERGING MARKETS-Chile’s peso leads weekly losses on Chinese copper concerns

By Susan Mathew and Ambar Warrick

Sept 10 (Reuters) – Chile’s peso lagged its Latin American peers this week as a sharp drop in Chinese copper imports triggered concerns over waning demand in Chile’s top export destination, while Brazil’s real fell more than 1% on concerns over political unrest.

The peso CLP= rose 0.6% on Friday, but it has lost nearly 3% this week after data released on Tuesday showed Chinese copper imports in August had plunged 41% from a year earlier.

Exports to China are a key source of foreign exchange for Chile and an economic slowdown in the world’s largest economy could spill over to Latin America.

Brazil’s real BRBY fell 0.4%, and was set for a weekly loss of more than 1% as investors weighed improving economic data against rising concerns over political unrest in the country.

President Jair Bolsonaro stepped back from his feud with the Supreme Court over its authorisation of investigations of him and his allies. He said a truckers’ strike in his support, which had disrupted routes for export items, would end on Sunday.

Data showed Brazilian retail sales rose in July, while Economy Minister Paulo Guedes also outlined a rosier outlook for Latin America’s largest economy in 2022.

Most other Latin American currencies were also set for weekly losses, as concerns over slowing global economic growth sapped sentiment.

Losses in Peru’s sol PEN=were limited after the central bank hiked its benchmark interest rate by 50 basis points to 1%. This is the second rate hike in a row as Peru battles a post-pandemic pick-up in inflation.

The bank said Thursday’s hike was not necessarily the start of a hiking cycle, but it also took out of its statement a reference to the need to maintain an expansionary monetary policy stance.

“We read these two statements as hinting the intention to move the policy rate towards neutrality but not necessarily through a front-loaded continuous rate normalization cycle,” Goldman Sachs analysts wrote in a note.

“Additional near-term rate hikes are likely given the deterioration of the current and prospective inflation and exchange rate outlook.”

Several emerging market central banks have embarked on a hiking cycle to stave off inflation, with Russia’s 25bps hike on Friday being the latest.

Among stocks, Chile’s LATAM Airlines LTM.SN slumped nearly 8%. Latin America’s largest carrier said it has received several offers to fund its exit from Chapter 11 bankruptcy. Each of the offers are worth more than $5 billion, less than the company’s claims estimates of between $8 billion and $9.9 billion.

Key Latin American stock indexes and currencies:

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