* Brazil July services activity up 1.1%, beating expectations * Colombia government seeks further 2023 budget increase * Chile launches plan to addres
* Brazil July services activity up 1.1%, beating expectations * Colombia government seeks further 2023 budget increase * Chile launches plan to address weakened economy * Argentina inflation seen easing back from July peak (Updates prices) By Anisha Sircar and Amruta Khandekar Sept 13 (Reuters) – Latin American currencies plunged on Tuesday as the dollar surged after data showed monthly U.S consumer prices unexpectedly rose in August, fanning fears of aggressive rate hikes in the world’s largest economy. Giving the Fed ammunition to deliver a third 75 basis points hike of the year, data showed the U.S. consumer price index gained 0.1% last month after being unchanged in July. Economists polled by Reuters had forecast a dip of 0.1%. As the dollar jumped 1.4%, currencies of Brazil, Colombia and Mexico all slumped more than 1% each, while tumbling copper prices saw top producer Chile’s peso drop 2.3% to hit near three-week lows. “We’re at a point where inflation (in Latam) is starting to cool faster than U.S. inflation and that differential creates risks for those currencies,” said Edward Al-Hussainy, senior analyst at Columbia Threadneedle. “Many Latam central banks are coming to the conclusion that they’ve broken inflation domestically, and therefore, their hiking cycles are likely to come to an end before the end of this year,” added Al-Hussainy. Emerging market currencies shave fallen over 6% this year as the dollar surged nearly 15% on bets of higher-for-longer interest rates in a post pandemic world struggling with surging inflation amid a war. Investors looked past upbeat data that showed services activity in Brazil rose 1.1% in July from June, above the median 0.5% increase forecast in a Reuters poll. In Chile, eyes were also on a workers dispute over safety at Chile’s large Escondida mine. Union workers approved a partial strike last week and threatened a complete work stoppage, but agreed to postpone action pending talks with the National Labor Directorate and mining regulator Sernageomin. On Monday, Chile’s government launched a plan to promote investment into 2023 that includes an array of tax breaks for the world’s largest copper producer at a time when its economy is faltering. Elsewhere, Colombia’s finance minister revised downward the economic growth forecast for next year to 1.8% from 2.2% previously, as the country struggles to recover. Meanwhile, the government wants to expand its budget for 2023 by 14.3 trillion pesos ($3.28 billion), a finance ministry spokesperson said. Elsewhere, Argentina’s inflation rate, heading toward 100% this year, likely eased in August versus a 20-year peak the month before, analysts polled by Reuters said. Key Latin American stock indexes and currencies at 1905 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 975.84 -0.33 MSCI LatAm 2172.38 -3.07 Brazil Bovespa 110908.97 -2.2 Mexico IPC 47125.76 -1.54 Chile IPSA 5580.41 -0.29 Argentina MerVal 143808.27 -0.626 Colombia COLCAP 1233.23 -0.19 Currencies Latest Daily % change Brazil real 5.1885 -1.79 Mexico peso 20.0637 -1.21 Chile peso 916 -1.97 Colombia peso 4405.45 -1.16 Peru sol 3.875 -0.87 Argentina peso 142.5700 -0.20 (interbank) (Reporting by Anisha Sircar and Amruta Khandekar in Bengaluru Editing by Marguerita Choy and Jonathan Oatis)
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