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Most commodity-linked Latin American

currencies fell against the dollar on Wednesday as oil and

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copper prices slid on concerns about Chinese demand, although

central European units outperformed on easing tensions over

missile hit in Poland.

Brazil’s real was volatile, last down 1.5%.

Citi strategists await Brazil’s President-elect Luiz Inacio

Lula da Silva’s fiscal easing plan, which local reports say

could be revealed later in the day. The market will focus on the

size of the waiver of the spending cap, the duration and the

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funding.

Leftist former Sao Paulo Mayor Fernando Haddad is

emerging as the front-runner to be Brazilian finance minister,

three sources said, although they added no decision has yet been

made.

A Haddad appointment would likely be seen by investors

as the latest sign that Lula appears to be elevating leftist

allies over centrists in formulating his government-in-waiting’s

economic policy.

The space for applying “unorthodox policies” in Brazil is

limited and the market will punish unusual economic experiments,

the chief economist of Swiss bank UBS, Paul Donovan, said in an

interview with newspaper Valor Econômico published on Wednesday.

Currencies of copper exporter Chile and oil exporter

Colombia dipped 2.8% and 1.9%, respectively.

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Colombia’s leftist government is considering

how to change the distribution of royalties

from extractive projects to more quickly benefit

communities, the country’s energy minister said on Wednesday.

The Mexican peso firmed around 0.3% and has

gained 6% so far this year, outperforming its regional peers.

“(For 2023) we prefer the Mexican peso to Brazilian real

exposure, given that the real trades on nearly twice the

volatility as the peso,” Chris Turner, global head of markets at

ING, said in a note.

“Mexico also looks much better placed in terms of debt,

and its higher sovereign rating should provide some protection

in the face of deteriorating external conditions.”

Meanwhile, Poland’s zloty rallied 0.9%, recovering

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almost all its losses over the last two sessions, while

Hungary’s forint rose 0.5% against a stronger euro

.

Fears of war spillover across the border eased after Poland

and military alliance NATO said a missile that crashed inside

Poland was probably a stray fired by Ukraine’s air defenses and

not a Russian strike.

The mood on Wall Street soured over a bleak sales outlook

from Target, giving most Latin American stocks their

cue. Brazil’s Bovespa led declines, down 2.7%.

Argentina’s currency slipped again. Ratings agency

Moody’s said Argentina’s rising central bank debt poses a risk

to the country’s monetary stability.

Key Latin American stock indexes and currencies by 1957 GMT:

Stock indexes Latest Daily %

change

MSCI Emerging Markets 951.86 -0.91

MSCI LatAm 2192.11 -2.43

Brazil Bovespa 110125.54 -2.68

Mexico IPC 51623.79 -0.06

Chile IPSA 5230.45 -0.17

Argentina MerVal 153895.40 -0.814

Colombia COLCAP 1279.82 -0.43

Currencies Latest Daily %

change

Brazil real 5.3808 -1.48

Mexico peso 19.3105 0.23

Chile peso 910.9 -2.77

Colombia peso 4936 -1.88

Peru sol 3.835 -0.62

Argentina peso (interbank) 162.4500 -0.20

Argentina peso (parallel) 304 -0.66

(Reporting by Susan Mathew and Devik Jain in Bengaluru; editing

by Barbara Lewis and Nick Zieminski)