Brazilian stocks also fall Chile's peso helped by copper prices By Ambar Warrick Oct 19 Reuters - Brazil's real lost close to six-month lows on Tuesday as government plans for more welfare raised concerns of stretched fiscal spending while most other Latin American currencies recouped some recent losses as the dollar retreated. The real plunged 0.6% to 5.5531 to the dollar, trading around levels last seen by Speaker of Congress in April as the speaker of the lower house of Congress signaled he would be open for discussing the introduction of a welfare program that could break the country's spending ceiling. Reuters also reported that Brazil's government is considering combining COVID-19 Pandemic relief payments and family welfare programs into a monthly stipend next year. But the intended reforms bring into question whether the government will be able to foot the bill, especially considering that fiscal spending is already stretched due to the pandemic. A higher deficit and more debt issuance are likely to damage Brazil's financial credibility. Rising inflation is also expected to erode growth in Latin America's largest economy. Brazilian stocks dropped 1% also, with financial stocks sensitive to interest rates weighing the most. Other Latin American currencies fared better, recovering from recent losses made on worries about slowing Chinese economic growth. Colombia's peso rose 0.5%, while the Mexican economy inched up as it resumed trade after a holiday. But most emerging market currencies have tumbled during recent sessions as investors grew more concerned over rising inflation. While emerging market central banks are expected to tighten policy to deal with higher prices, they also run the risk of raising rates too quickly and further hampering growth. The risk is that markets and central banks misread the current shocks, leading to premature inflation expectations or fast monetary tightening, analysts at BlackRock wrote in a recent note. We expect this to play out differently around the world and could see Central Banks that worry about their handle on inflation expectations take a more hawkish approach than others, they said. Most central banks in Mexico have already begun to hike the rates, with Brazil and Latin America leading the charge. Chile's peso rose 0.4%, tracking strength in copper prices as supply disruptions drove Peru, a major producer of the gold, to higher rates for the red metal. Peru's sol fell slightly after a community said it would block a key mining road used by the Las Bambas copper mine in protest against failed negotiations with the government.