* Fed rate decision due 1800 GMT * Brazil's retail sales rise in April * Nigeria allows naira to drop over 36% on official market * Latam FX up 0.3%,
* Fed rate decision due 1800 GMT * Brazil’s retail sales rise in April * Nigeria allows naira to drop over 36% on official market * Latam FX up 0.3%, stocks up 1.3% By Amruta Khandekar June 14 (Reuters) – Latin American currencies rose against a weaker dollar on Wednesday as market hopes that the Federal Reserve will skip a rate hike at the end of its meeting later in the day gained steam after recent evidence of falling inflation. MSCI’s index for Latin American currencies was up 0.3% while the dollar retreated ahead of the Federal Reserve’s policy announcement due at 1800 GMT. The U.S. central bank is widely expected to keep interest rates unchanged for the first time since it kicked off a rate-hiking cycle early last year, with a larger-than-expected drop in U.S. producer prices boosting those hopes. “For a long time during May, basically everything was interpreted in a U.S. dollar positive way in that it supports the case of further rate hikes, and now the closer we came to the actual Fed meeting this sentiment seems to have turned around,” said Esther Reichelt, FX strategist at Commerzbank. “Everybody is betting that the next move is a rate cut (from Latam countries). Even if you’re going to see these rate cuts and if at all there is some doubt about seeing further rate hikes by the Fed, the relative performance is also in favor of the Latin American currencies.” The Brazilian real rose 0.4% against the dollar, clinging to a one-year high. Retail sales in Brazil rose for the second consecutive month in April, data showed, but the growth was below market forecasts. Also supporting Latin American currencies on Wednesday were firm commodity prices, which received a boost from a weaker dollar as well as hopes of a policy stimulus from China. Mexico’s peso gained 0.5%, clinging to seven-year highs against the greenback as an uptick in crude prices helped the currency of the leading oil exporter. Helping Chile’s peso extend gains to the second straight session were higher copper prices, with the country being the world’s biggest copper producer. The CEO of Chile’s state-owned mining giant Codelco is stepping down after only a year in the role, citing personal reasons and “complexities” in running the world’s largest copper producer. The currency of Peru, the second biggest copper exporter after Chile, jumped 0.7%. Latin American stocks climbed 1.3%. Elsewhere, Turkish President Tayyip Erdogan said his newly appointed Finance Minister Mehmet Simsek will take unspecified steps swiftly with the central bank, but that it was a mistake to suggest Erdogan had changed his own views on interest rates. Nigeria’s central bank allowed the naira currency to drop as much as 36% on the official market on Wednesday, days after President Bola Tinubu suspended the central bank governor who oversaw much-criticised multiple exchange rates. Nigeria’s sovereign dollar bonds surged as much as 2.7 cents in the dollar. Key Latin American stock indexes and currencies at 1433 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1014.85 0.16 MSCI LatAm 2463.90 1.43 Brazil Bovespa 118313.74 1.35 Mexico IPC 55041.73 0.86 Chile IPSA 5707.33 -0.09 Argentina MerVal 383722.35 0.478 Colombia COLCAP 1184.39 -0.08 Currencies Latest Daily % change Brazil real 4.8413 0.41 Mexico peso 17.1423 0.34 Chile peso 798.3 0.59 Colombia peso 4193.7 -0.39 Peru sol 3.6407 0.74 Argentina peso 247.7500 -0.24 (interbank) Argentina peso 487 0.41 (parallel) (Reporting by Amruta Khandekar, Editing by William Maclean)
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