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Peru's economy slows in December, misses forecasts
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Brazil's economic activity rose by 2.9% in 2022
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Stocks fall 0.8%, FX off 0.3%
By Shubham Batra and Bansari Mayur Kamdar Feb 16 (Reuters) - Latin American stocks fell on Thursday after hotter-than-expected U.S. inflation data stoked fears that the Federal Reserve would stick to its hawkish monetary policy for longer, while Colombia's peso led the declines in regional currencies. The MSCI's index for Latin American currencies slipped 0.3% by 1450 GMT, as the dollar index erased early losses and gained following stronger-than-expected U.S. producer prices data. In a separate report, U.S. jobless claims data also showed a resilient labor market, with claims of 194,000, compared with expectations of 200,000, according to a Reuters poll. Stocks in Latin America slid 0.8%. Colombia's peso dropped 1.5%, adding to previous session's sharp losses, with investors wary of the social and economic reforms put forward by the government of President Gustavo Petro. "Colombian peso is a currency that is prone to suffer whenever financial conditions tighten, whenever yields go back up, and whenever risk sentiment wobbles, which is what we have had in the past few days," said Alejandro Cuadrado, global head of FX strategy at BBVA. Adding to woes, data overnight showed Colombia's economy grew at a slower-than-expected pace in 2022. "Going forward, we expect economic activity to moderate as high inflation, rising interest rates, tighter financial conditions, and policy uncertainty due to ambitious policy reforms already approved and the expectation of additional government proposals weigh on activity," Goldman Sachs economist Santiago Tellez said. Currency of the world's top copper producer Chile fell 1.0%, while Peru's sol slipped 0.3% against the greenback. Data on Wednesday showed the Peruvian economy slowed for the second month in a row in December, missing forecasts, while the country faces a wave of social unrest that began early December. "We do not expect Peru's economy to grow in January as the social unrest will have had a greater impact in January than it did in December, not only because of the radicalisation but also because the extended road blockades," Pablo Nano, deputy head economist at Scotiabank, said. Brazilian real declined 0.6%, amid broader risk-off moves. Data showed economic activity in the region's largest economy grew by 2.9% in 2022, supported by the strength of the services sector. Mexico's peso slipped 0.3%.
Key Latin American stock indexes and currencies at 1450 GMT:
Stock indexes Latest Daily %
change
MSCI Emerging Markets 1007.72 0.28 MSCI LatAm 2222.94 -0.83
Brazil Bovespa 108893.00 -0.65
Mexico IPC 53633.34 0.4
Chile IPSA 5411.28 0.12 Argentina MerVal 254288.39 -0.267
Colombia COLCAP 1219.34 -0.01 Currencies Latest Daily %
change
Brazil real 5.2508 -0.63
Mexico peso 18.6457 -0.38
Chile peso 797.5 -0.83
Colombia peso 4971.56 -1.53
Peru sol 3.868 -0.72
Argentina peso (interbank) 192.7400 -0.19 Argentina peso (parallel) 373 1.34 (Reporting by Shubham Batra and Bansari Mayur Kamdar in
Bengaluru; Editing by Shounak Dasgupta)
