Mexican peso, Peru’s sol lead Latam FX higher, stocks gain as Omicron worries ebb

Dec 23 (Reuters) – Latin American currencies gained on Thursday with the Mexican peso and Peruvian sol hitting one-month highs, while stocks in the region joined a global rally as investors cheered signs that the Omicron variant may not be as severe as feared.

The MSCI’s index of the region’s stock markets (.MILA00000PUS) rose 1% tracking gains on Wall Street with the benchmark S&P 500 (.SPX) closing in on an all-time high after robust economic data.

Main bourses in Argentina (.MERV), Chile (.SPIPSA)and Mexico (.MXX) gained between 0.4% and 2%, while Brazilian markets (.BVSP) lagged in thin trading volumes ahead of Christmas and New Year holidays.

Two vaccine makers said their shots protected against Omicron as UK data suggested it may cause proportionally fewer hospital cases than the Delta coronavirus variant, though public health experts warned the battle against COVID-19 was far from over.[nL8N2T816M]

“Omicron is looking more like a short-term disruption to the economic outlook and not a destructive headwind that knocks the economy off its course,” said Edward Moya, senior market analyst at Oanda.

Latin American currencies (.MILA00000CUS) rose 0.8% as the dollar index hit session lows before it steadied after data signaled strength in U.S. consumer spending and labor market, as well as growing inflationary pressures. read more

The Brazilian real was unchanged as data showed consumer price index reached its highest December reading in six years as the country struggles with persistent inflation.

The Chilean peso , the Colombian peso and the Argentine peso were little moved, but the Mexican peso held near recent highs hit in the wake of a bumper interest rate hike last week and the Peruvian sol hit its one-month highs.

Data showed inflation in Mexico was lower than expected during the first half of December, though core inflation exceeded forecasts, prompting a member of the central bank’s board to voice concern about underlying price pressures. read more

“To stop the galloping inflation and bring it down, policymakers will need to put monetary conditions in restrictive territory,” said Alfredo Coutino, head of Latin America Economic Research at Moody’s Analytics.

Mexico’s central bank raised its benchmark rate by 50 basis points to 5.50% last week, outpacing market expectations.

Among stocks, Shares of bankrupt Mexican carrier Grupo Aeromexico (AEROMEX.MX) fell almost 15% after surging more than 10% in volatile trading in the wake of restructuring measures announced last week. read more

Meanwhile, an internal evaluation at the International Monetary Fund found that its 2018 arrangement with Argentina for $57 billion adhered to relevant policies and procedures, but was “too fragile” to deal with the country’s structural challenges and political realities. read more

A source told Reuters that Argentina will make a $1.9 billion payment to the IMF as it races to revamp a failed loan deal from 2018. read more

The IMF also approved a three-year, $688 million program for Suriname, with some $55 million enabled for immediate disbursing. read more

Key Latin American stock indexes and currencies:

Reporting by Sruthi Shankar and Shashank Nayar in Bengaluru; Editing by Dan Grebler and Diane Craft

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