Brazil real recovers as economy minister quashes resignation bets

Brazil's real rose on Tuesday after Economy Minister Paulo Guedes put to rest speculation about his imminent departure, while Mexico's peso resumed its winning streak as the country's president said an economic recovery plan would be unveiled in two weeks.

Against a sinking dollar, Brazil's real firmed 0.4%, recovering from its lowest level since May. The Bovespa stock index was headed toward its best day in three weeks, aided also by upbeat earnings from retailer Magazine Luiza.

Guedes, who is the Brazil government's remaining "super minister," said late on Monday he had the full confidence of President Jair Bolsonaro. Speculation was rife that political pressure for more public spending could force him to quit, sending Brazil markets well into the red on Monday.

The country has seen a slew of ministerial resignations in the past few months over differences with the administration, increasing political uncertainty and with it doubts about the future of reforms in the country.

Lower house speaker Rodrigo Maia on Monday said he is confident congress will approve tax reform this year.

"He (Guedes) wants to maintain the spending cap which limits annual government spending, while there are demands to abandon it this year due to the crisis. That means times remain tough for BRL," said You-Na Park-Heger, forex and emerging markets analyst at Commerzbank.

"It is mainly the ailing national finances that cause concern amongst central bankers so that they see the possibilities of an expansionary monetary policy as limited."

Brazil had registered 3.4 million cases of the disease and more than 108,000 related deaths as of Monday.

In Mexico, the peso rose 0.2%, up for the fifth time in six. The plan to revive the economy from the coronavirus pandemic would target sectors like construction and energy, President Andres Manuel Lopez Obrador said on Monday.

Crude exporter Colombia's peso edged lower as a bounce faded from news on Monday of the United States working with the country on an investment initiative of up to $5 billion in private funds for rural areas over three years.

A surge in copper prices, meanwhile, helped investors look past a 14.1% plunge in GDP of the red metal's top exporter, Chile. The country's peso tracked its best session in a month as the data showed mining remained a bright spot, with the industry growing 1.6% despite the pandemic.

Argentina's peso, returned from an extended weekend to plumb to new lows, even as creditors reaffirmed their support for the government's amended bond restructuring offer, which was filed to the US Securities and Exchange Commission on Monday.