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Dollar index gains ground after initial declines
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Brazil's Neto against experiment on monetary policy
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Chile c.bank to hold rates in April -poll
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Latam FX down 0.2%, stocks down nearly 1%
(Updates prices)
By Shubham Batra and Bansari Mayur Kamdar
Feb 14 (Reuters) - Latin American currencies were
subdued on Tuesday as the dollar gained ground after initial
declines following a U.S. inflation reading that did little to
change interest rate hike expectations while Chile's peso hit an
over one-week high.
The dollar index climbed from a roughly two-week low
hit earlier in the session after data showed U.S consumer prices
accelerated in January, but the annual increase was the smallest
since late 2021.
The mixed data did not alter market expectations that the
U.S. central bank will raise interest rates by 25 basis points
at least two more times.
The MSCI's index for Latin American currencies was down 0.2% by 1943 GMT.
"The Fed will read this inflation report as supporting their view that further rate increases (plural) are appropriate in 2023," said Bill Adams, chief economist for Comerica Bank. "But they also acknowledge much more uncertainty about the appropriate course for monetary policy than in 2022, when the gap between short-term interest rates and inflation was much larger." The currency of the world's biggest copper producer, Chile , gained 1.3% as prices of the red metal firmed, while the Peruvian sol was flat. A central bank poll of traders showed Chile's central bank is expected to maintain the country's benchmark interest rate at 11.25% at its next monetary policy meeting in April.
Colombia's peso was subdued against the dollar, with data showing the country's retail sales fell 1.8% in December 2022 from the same month in 2021. The Brazilian real fell 0.5% amid ongoing speculation about increasing inflation targets following appeals from President Luiz Inacio Lula da Silva. Central bank governor Roberto Campos Neto said the country is not at a moment when "it would be good to experiment" on monetary policy.
Oil exporter Mexico's peso was up 0.2%. Stocks in Latin America reversed early gains and fell 0.9% as Brazil's Bovespa deepened losses to drop nearly 1%. Banco do Brasil SA rose 2.7% after the state-controlled lender said it expects further profit growth this year. Elsewhere in emerging markets, the Kenyan shilling hit a fresh low as dollar demand from the oil sector outpaced thin foreign-currency supply. Global ratings agency Fitch cut Pakistan’s sovereign credit rating by two notches from CCC+ to CCC-, citing policy and large refinancing risks, critically low reserves and difficult conditions set by the International Monetary Fund. Argentina's monthly inflation rate stood at 6.0% in January, according to data from the country's statistics agency released on Tuesday. Key Latin American stock indexes and currencies at 1943 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1013.15 -0.04 MSCI LatAm 2223.72 -0.92 Brazil Bovespa 107804.21 -0.95 Mexico IPC 52637.81 -0.78 Chile IPSA 5333.29 -0.61 Argentina MerVal 260849.12 1.251 Colombia COLCAP 1219.96 -1.63 Currencies Latest Daily % change Brazil real 5.2025 -0.54 Mexico peso 18.5129 0.22 Chile peso 785 1.26 Colombia peso 4769.97 -0.14 Peru sol 3.8432 0.03 Argentina peso 191.9900 -0.18 (interbank) Argentina peso 375 1.07 (parallel) (Reporting by Bansari Mayur Kamdar, Shubham Batra and Amruta Khandekar in Bengaluru; Editing by Andrea Ricci and Matthew Lewis)
@BansariKamdar;))