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EMERGING MARKETS-Rouble slides as Germany says Navalny poisoned with Novichok, Brazil's real gains

Sagarika Jaisinghani
·3 min read

* Brazil central bank sees growth of 4% or more in 2021 * Dollar firms as U.S. data signals improving economy * LatAm equities slide after best day in three months * Chilean peso, Mexican peso among biggest FX decliners By Sagarika Jaisinghani Sept 2 (Reuters) - The Russian rouble slid 2% on Wednesday after Germany said Kremlin critic Alexei Navalny had been poisoned with a nerve agent of the Novichok family, while the Brazilian real rose as data signaled a stable post-pandemic economic recovery. After having opened slightly weaker against the U.S. dollar, the rouble tumbled 2.4% to 75.30 in reaction to the German comment. Versus the euro, the rouble fell 1.5% to 88.93. The real firmed for a second straight session as data showed factory gate inflation rose at its fastest pace in July, driven by increasing food costs and the price of oil and biofuels products. A selloff in the currency has eased recently amid stronger-than-expected macroeconomic data, including record growth in manufacturing activity last month. Central bank chief Roberto Campos Neto said on Wednesday Latin America's biggest economy was on course to shrink by about 5% this year and grow by 4% or more in 2021, stressing the importance of the government resuming its agenda of strict fiscal discipline. A wider index of Latin American currencies eased 0.4% as the dollar bounced off two-year lows following upbeat factory activity data in some of the world's biggest economies. "Solid economic data out of the United States and China are giving investors hope that the global economy might recover faster than expected from the COVID-19 crisis," said Milan Cutkovic, market analyst at AxiCorp. "This is an important signal for markets, which have already priced in a lot of positive news." A basket of Latin American equities fell 0.7% after posting its best session in three months on Tuesday. Losses were led by bourses in Brazil and Argentina , while the Colombian stock index bucked the trend to gain about 1%. Brazilian miner Vale SA slid 1.4% as it said in a filing it failed to meet safety standard levels for three dams in Minas Gerais state, adding it did not see any impact on iron ore production this year. The Chilean peso eased 0.2%. The country's central bank softened its prediction for an economic contraction in 2020 in the world's top copper producer, saying on Wednesday the gradual easing of coronavirus-led lockdowns and "support for household income" had helped bolster the flailing economy. Chile's currency has bounced about 14% from its March lows to trade near its January high of 749.93 to the dollar. By contrast, the Mexican peso is still about 15% below its own pre-pandemic highs. On Wednesday, it eased another 0.2%, with President Andres Manuel Lopez Obrador saying the 2021 budget will call for spending on priority infrastructure and will not raise taxes. The finance ministry is due to present the new budget on Sept. 8. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 1116.48 -0.32 MSCI LatAm 2003.41 -0.68 Brazil Bovespa 101469.05 -0.68 Mexico IPC 37070.86 -1.11 Chile SPIPSA 3801.47 1.29 Argentina MerVal 45700.55 -1.815 Colombia Colcap 1268.23 0.99 Currencies Latest Daily % change Brazil real 5.3662 0.34 Mexico peso 21.8270 -0.17 Chile peso 772.8 -0.21 Colombia peso 3646.7 0.63 Peru sol 3.5297 -0.08 Argentina peso (interbank) 74.3100 -0.08 (Reporting by Sagarika Jaisinghani in Bengaluru; Editing by Lisa Shumaker)