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Dollar firms on fears of more aggressive Fed
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Brazil's Haddad: discussing rate level 'more important'
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Argentina to hold rate at 75% as inflation reheats -
sources
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Latam FX falls 0.7%, stocks up 0.5%
(Updates prices, adds comment)
By Unknown 1d047bbb-7251-446d-86e5-e20931b1e75e and Bansari
Mayur Kamdar
Feb 15 (Reuters) - Latin American currencies slid on
Wednesday against a stronger dollar after economic data added to
fears of a more aggressive U.S. Federal Reserve, while
Colombia's peso dropped to a near six-week low to lead losses
among regional peers.
The dollar index jumped in the wake of
stronger-than-expected retail sales data underscoring a
resilient U.S. economy, and stubbornly high U.S. inflation data
overnight suggesting that the Fed was far from pausing its
interest rate hiking campaign.
The MSCI's index for Latin American currencies had fallen 0.7% by 1939 GMT, while the broader
emerging market (EM) currencies index was down
0.5%.
"Even at the rate that we have on inflation, we probably have two, maybe three rate hikes at most," said Sadiq Adatia, chief investment officer at BMO Global Asset Management.
"When you start seeing the Fed get to a pause, you're going to see the U.S. dollar weakening. That should be a big tailwind for the emerging market region."
EM equities and debt
attracted the largest monthly net inflow in January in two years, the Institute of International Finance said on Wednesday.
Colombia's peso fell nearly 3% against the dollar after data showed the Andean country's economy grew 7.5% last year, lower than market expectations. This follows overnight numbers that showed December's core retail sales and manufacturing contracted in the region's fourth-largest economy. "Colombia is a country that has a combination of all of the negative factors that will affect their currency and sink it such as labor strikes, a global economy that doesn't seem to be necessarily recovering, and a U.S. economy that is relentless," Juan Perez, director of trading at Monex USA, said. Thousands of people took to the streets of Colombia's major cities on Wednesday to protest social and economic reforms that leftist President Gustavo Petro presented to Congress. The currency of the world's biggest copper producer, Chile , slid 0.8%, tracking prices of the metal lower. The Peruvian sol fell 0.6% as data showed its economy
slowed down for the second month in a row and missed forecasts.
Mexico's peso slid 0.4% against the greenback. Bank of Mexico Deputy Governor Irene Espinosa said on Wednesday that the bank's monetary posture is in restrictive territory and the balance of risks to inflation remains tilted to the upside. The Brazilian real fell 0.4% after Finance Minister Fernando Haddad said discussing the interest rate level was more important than debating inflation targets. Stocks in Latin America reversed early losses to rise 0.5%, with Brazil's Bovespa up 2%.
Argentina's central bank is set to hold its benchmark interest rate steady at 75% this week, bank sources told Reuters. Key Latin American stock indexes and currencies at 1939 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1004.30 -1 MSCI LatAm 2243.75 0.45 Brazil Bovespa 110023.33 2.02 Mexico IPC 52930.84 0.51 Chile IPSA 5404.92 1.36 Argentina MerVal 253751.44 -1.823 Colombia COLCAP 1198.02 -2.02 Currencies Latest Daily % change Brazil real 5.2185 -0.38 Mexico peso 18.5886 -0.42 Chile peso 790.9 -0.82 Colombia peso 4895.45 -2.99 Peru sol 3.8527 -0.55 Argentina peso 192.3700 -0.19 (interbank) Argentina peso 374 1.34 (parallel) (Reporting by Shubham Batra and Amruta Khandekar; Editing by Shounak Dasgupta and Nick Macfie)
