* Brazil's real falls, but set to gain for fourth straight week * Peru' sol gains after c.bank holds rates * Latam FX down 0.3%, stocks fall 0.5% (Upd
* Brazil’s real falls, but set to gain for fourth straight week * Peru’ sol gains after c.bank holds rates * Latam FX down 0.3%, stocks fall 0.5% (Updates prices, adds details) By Shashwat Chauhan and Bansari Mayur Kamdar April 14 (Reuters) – Most Latin American currencies were subdued on Friday as the dollar gained ground on concerns of more rate hikes in the United States, while the Peruvian sol outpaced regional peers after its central bank held rates steady overnight. The MSCI’s Latin American currencies index fell 0.3% by 18:06 GMT, but was off session lows and set for weekly gains of 2.2%. The dollar bounced off a one-year low against a basket of currencies after data showing a decline in U.S. retail sales suggested the economy was cooling but not fast enough to stop the Federal Reserve from raising interest rates again in May. “We think perhaps one more Fed hike and that’s most likely the top of the cycle … likely the dollar will remain relatively soft or worse range bound and that’s potentially good for emerging markets,” said Jon Harrison, managing director of EM macro strategy at TS Lombard. “Emerging markets are also exposed to U.S. equities, so if we do get a very deep recession, that will be negative for emerging markets so we’re seeing conflicting signals at the moment.” Bucking the trend, Peru’s sol gained 0.3% against the greenback after its central bank kept its benchmark interest rate unchanged at 7.75% on Thursday for the third consecutive time. The central bank on Friday projected that annual inflation will continue to trend downward in the coming months. “We anticipate that the MPC will maintain a restrictive monetary policy stance at least through the start of 2H2023, avoiding the temptation of premature easing of the policy stance,” said economists at Goldman Sachs. Brazil’s real was flat against the dollar but set to finish the week in the green for the fourth straight time. Data showed services activity in Brazil fell 3.1% in January from the previous month. Brazil reset its diplomatic ties with China, its largest trading partner, with a state visit on Friday where they agreed to boost investments and cooperation on technology and sustainable development. The Colombian peso rose 0.2% against the dollar, extending its winning streak to the tenth day, while Mexico’s peso shed 0.1%. The head of Mexico’s mining chamber on Thursday issued a stark warning against a proposed overhaul of the country’s mining laws, saying this could cost the country some $9 billion in lost investment in coming years and up to 420,000 direct jobs. The Chilean peso was down marginally against the dollar. Latin American stocks fell 0.5%, but had risen 5.9% on the week. Later in the day, investors would be on the lookout for retail sales and industrial output data from Colombia and monthly inflation data out of Argentina. Elsewhere in emerging markets, Israel’s shekel fell 0.7% against the dollar after data showed inflation eased to 5%, its lowest level since September 2022. Pakistan’s international bonds rose as much as 2.5 cents to trade between 36.4 cents and 48.5 cents on the dollar, data from Tradeweb showed, after the United Arab Emirates confirmed financial support of $1 billion. Key Latin American stock indexes and currencies at 1806 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 999.75 0.27 MSCI LatAm 2295.04 -0.48 Brazil Bovespa 106223.55 -0.22 Mexico IPC 54373.57 -0.59 Chile IPSA 5406.84 1 Argentina MerVal 274877.54 1.683 Colombia COLCAP 1242.61 0.19 Currencies Latest Daily % change Brazil real 4.9269 0.00 Mexico peso 18.0240 -0.14 Chile peso 795.7 -0.03 Colombia peso 4407 0.17 Peru sol 3.7715 0.34 Argentina peso 215.0900 -0.19 (interbank) Argentina peso 396 1.01 (parallel) (Reporting by Shashwat Chauhan, Bansari Mayur Kamdar and Amruta Khandekar in Bengaluru; Editing by Richard Chang and Alistair Bell)
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