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Dollar gains after strong U.S. jobs gain
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Brazil's industrial production drops in 2022
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Chile copper production falls in December
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Latam FX off 2%, stocks down 1.9%
By Amruta Khandekar Feb 3 (Reuters) - Latin American currencies fell sharply on Friday as the dollar strengthened after data showed U.S. employers added significantly more jobs than expected last month, while emerging market stocks were set for their first weekly fall in 2023. MSCI's index for Latin American currencies was down 2% at 1500 GMT after having touched multi-year highs in the previous session, compared to a 0.9% decline in broader emerging market currencies . The U.S. Labor Department's highly-anticipated monthly employment report showed nonfarm payrolls surged by 517,000 jobs in January. Economists in a Reuters poll had forecast a gain of 185,000.
The data, which came on the heels of largely dovish messages from the Federal Reserve and some other central banks earlier this week, spurred concerns about interest rates staying elevated for longer than expected, boosting the dollar . "It's definitely questioned the need for the Fed to ease policy later in the year, so that understandably has weighed on emerging market currencies," said Chris Turner, global head of markets at ING. "I think a modest correction in emerging market currencies is understandable. I don't think we need to see a really sharp sell-off (going forward), not unless U.S. price pressures pick up." Most Latin American currencies were at session lows. The Brazilian real was down 1.9% against the dollar. Brazilian President Luiz Inacio Lula da Silva issued his latest threat to the autonomy of the country's central bank on Thursday, a day after it floated the possibility of keeping interest rates at a six-year high for longer than expected. Industrial production in Brazil fell 0.7% in 2022, government statistics agency IBGE said on Friday. The currencies of Mexico and Colombia , both oil exporters, dropped 1.4% and 1.9%, respectively, despite an uptick in crude prices. . Chile's peso fell 1.4% as data showed total copper production in the country, the world's largest producer of the metal, slumped 0.5% to 495,800 tonnes in December. In Peru, the world's second-largest copper producer, the sol currency was down 0.8%.
Meanwhile, EM stocks fell 0.8% and were on track for a weekly loss of 1.4%, bogged down by declines in Chinese equities amid concerns about the country's economic recovery. Latam stocks dropped 1.9%.
In India, both houses of the country's parliament were adjourned on Friday amid chaotic scenes as some lawmakers demanded an inquiry following the meltdown of shares in billionaire Gautam Adani's companies. S&P Global Ratings revised its outlook on Adani Ports and Special Economic Zone and Adani Electricity to negative from stable, saying there was a risk investor concerns about the companies' governance and disclosures were larger than currently thought. Key Latin American stock indexes and currencies at 1500 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1036.98 -0.82 MSCI LatAm 2272.30 -1.89 Brazil Bovespa 110294.57 0.14 Mexico IPC 54087.30 0.39 Chile IPSA 5303.31 -0.19 Argentina MerVal 248394.41 -0.185 Colombia COLCAP 1259.55 -0.04 Currencies Latest Daily % change Brazil real 5.1157 -1.39 Mexico peso 18.9149 -1.43 Chile peso 789.1 -1.36 Colombia peso 4673.8 -1.88 Peru sol 3.8496 -0.75 Argentina peso 187.9400 -0.19 (interbank) Argentina peso 374 1.07 (parallel) (Reporting by Amruta Khandekar in Bengaluru; Editing by Paul Simao)
