Emerging Markets – Chilean Peso drops more than 1% on concerns about copper prices

* Chile’s Codelco expects copper prices to fall next year * Chile shares down 3.4% * Brazilian shares rebound in 2022 – Reuters poll * Argentina shares up nearly 6% (updates prices) By Susan Mathieu Dec 1 (Reuters) – Chilean peso falls 1.3 % on Wednesday due to the possibility of a decline in copper prices, while most other Latin American currencies settled against the stable dollar. Chile’s currency returned to its lowest level in seven months, while the stock index in Santiago fell 3.4%, extending losses to the seventh consecutive session. Chile’s state-owned Codelco, the world’s largest copper producer, said Wednesday that it expects copper prices to fall within a year to between $3.80 and $3.90 a pound, down from current prices of just under $4.30 a pound. Copper prices on the London Metal Exchange gave up gains to fall 0.3% after Codelco’s estimate. Data on Wednesday also showed that economic activity in Chile jumped 15% in October from a year ago, but missed analyst estimates. “We doubt that the Chilean economy will continue to operate above its potential as many challenges emerge for growth,” said emerging markets economist Nikhil Sanghani of Capital Economics, citing slowing growth in China, the pandemic and tight monetary policy. Meanwhile, the Pan American Health Organization said on Wednesday that the new variant of the Corona virus from Omicron is likely to soon spread to other countries in North and South America after it was detected in Canada and Brazil. “While the market attempts to ascertain how negative the Omicron shock will be, volatility is likely to remain elevated, with a negative bias for risky assets,” Citi economists wrote in a note to clients. “We have been negative about EMFX getting into this, and Omicron should give another boost to EMFX weakness.” The Brazilian real fell 0.4% to its lowest level in one month. Most of the Latin American currencies rose, with higher oil prices helping the Mexican peso extend its gains for the third consecutive session, while the Colombian peso moved away from its lowest level in 19 months. Stocks in the region were mixed, with Brazil’s main index losing 1%, while Argentine stocks rose nearly 6% — on track for their best session in 16 months. Argentina’s government said a team from the Economy Ministry and the Central Bank will travel to Washington this weekend to meet with International Monetary Fund staff and advance talks on a new deal. Brazil’s Economy Minister Paulo Guedes has said the country should privatize state oil company Petrobras before it becomes irrelevant and oil loses value. Shares rose between 0.7% and 1%. A Reuters poll showed that Brazilian stocks are likely to rebound in 2022 from a sharp decline this year, as investors search for deals, but political uncertainty in the run-up to the country’s 2022 presidential election may pose risks. Major Stock Indices and Currencies in Latin America at 1435 GMT: Stock Indices Latest Daily Change in MSCI Emerging Markets 1228.23 1.3 MSCI LatAm 2040.08 0.16 Brazil Bovespa 100819.40 -1.08 Mexico IPC 50485.67 1.58 Chile IPSA 4332.49 -3.38 Argentina MerVal 83918.37 Percentage 5.803 Colombia 3.28 Currencies For daily changes in Brazil Real 5.6604 -0.44 Mexican Peso 21.3684 0.32 Chilean Peso 837.9 -1.40 Colombian Peso 3963.76 0.72 Peru Sol 4.07 -0.40 Argentine Peso 101.0000 -0.06 (Interbank) (Report by Shreyachi Sanyal in Bengaluru Editing by Alistair Bell)

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