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Brazil puts off discussion of inflation targets
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Colombia's peso set to end third week lower
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Mexico's economy grew by 2.8% in Jan - preliminary
estimate
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Latam FX adds 1.3%, up nearly 2% so far this week
(Updates prices, adds comment)
By Shubham Batra and Bansari Mayur Kamdar
Feb 17 (Reuters) - Latin American currencies rose on
Friday and were on track for their first weekly gain in
February, while regional stocks also outpaced their emerging
market peers this week supported by sharp gains in Mexican and
Brazilian shares.
The MSCI's index for Latin American currencies was up 1.3% at 1930 GMT and was on track to end
the week nearly 2% higher.
The broader emerging market currencies index was down 0.2% and headed for its second straight
weekly loss.
"Over the coming next few months we're going to see most of the central banks in Latam start to cut interest rates and that's one of the factors that gives a boost to the equity market and some currencies," said Andres Abadia, chief Latin America Economist at Pantheon Macroeconomics. "At the same time, with the reopening of the Chinese economy, we expect some commodity prices and some commodity markets to do better than we've seen in the last few months and that also gives some support to these countries."
The Brazilian real jumped 1% against the dollar after the country's top economic policy body announced no new resolutions regarding its inflation targets at a monthly meeting on Thursday. Oil exporter Mexico's peso added 0.8%, hitting its highest level since mid-2018 and was set for its second straight weekly gain. The Mexican economy was likely to have grown by 2.8% in January 2023, compared with the same month a year earlier, showed a preliminary estimate from its national statistics agency INEGI. "The peso’s sensitivity to the US business cycle means that it is likely to underperform most emerging market currencies if, as we forecast, GDP in the US declines in the second and third quarters of this year," wrote Jonathan Petersen, senior markets economist at Capital Economics in a note. Colombia's peso rose 0.4% but was on track to post its third week of losses, with investors wary about social and economic reforms put forward by President Gustavo Petro's government. The Chilean peso rose 0.2% against the greenback while the Peruvian sol rose 0.1%.
Regional stocks rose 0.4% and were on track for weekly gains helped by Brazilian and Mexican stocks . The broader emerging markets index for stocks was on track for its third week of losses. Investment bank Morgan Stanley lifted the average "recovery value" for Ghana's defaulted dollar-denominated government bonds to $46 from a previous forecast of $41 following the country's deal to restructure its local currency debt. Key Latin American stock indexes and currencies at 1930 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1000.31 -1.07 MSCI LatAm 2267.45 0.39 Brazil Bovespa 109350.76 -0.54 Mexico IPC 53678.10 -0.63 Chile IPSA 5327.39 -2.28 Argentina MerVal 248955.96 -3.223 Colombia COLCAP 1207.62 -1.53 Currencies Latest Daily % change Brazil real 5.1600 0.99 Mexico peso 18.3630 0.81 Chile peso 789.3 0.20 Colombia peso 4904.6 0.44 Peru sol 3.8323 0.08 Argentina peso 193.1900 -0.19 (interbank) Argentina peso 373 1.07 (parallel) (Reporting by Shubham Batra, Bansari Mayur Kamdar and Amruta Khandekar in Bengaluru, Editing by Angus MacSwan)
