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Mexico's retail sales rise 0.1% in Dec from Nov
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Israeli shekel nears three-year low
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EM stocks down nearly 1%, currencies off 0.3%
By Amruta Khandekar Feb 21 (Reuters) - Latin American currencies were muted on Tuesday as focus turned to minutes from the U.S. Federal Reserve's latest meeting due later in the week, with gains in the Chilean peso limiting declines. MSCI's index for Latin American currencies was down 0.02% at 1400 GMT after three straight sessions of gains, while stocks in the region were also flat. Investors are awaiting minutes from the Fed's first meeting of 2023 due on Wednesday for clues on how long the central bank could keep tightening monetary policy.
"The Fed minutes will be more closely watched than ever as the market looks for every clue as to the likely path of Fed rates between here and the terminal rates," said Christian Lawrence, senior market strategist at Rabobank. "U.S. real rates are the most important driver of pretty much every asset class at the moment and EM is no exception." Hawkish comments from several Fed policymakers as well as recent data signalling strength in the U.S. economy has doused hopes of the Fed ending its rate hiking cycle soon, driving gains in the dollar and pressuring risk-sensitive EM assets. On Tuesday, Chile's peso rose 0.7% against the greenback, clawing back losses from the previous session when it logged its steepest one-day percentage fall in over two weeks. Mexico's peso was flat. Data showed retail sales in Latin America's second largest economy rose 0.1% in December from November. The peso has risen over 6% so far in 2023 and has been among the best performing currencies in Latin America, with analysts pointing to its close ties with the U.S. economy as the reason. As investors returned after a long weekend in the United States, markets in Brazil and Argentina remained closed for the second straight day on account of public holidays. The Peruvian sol rose 0.2% while the Colombian peso was down 0.5%. Elsewhere in emerging markets, Israel's shekel slid 1.6% against the dollar to a nearly three-year low on Tuesday after the country pressed ahead with its judiciary overhaul plan, even as the finance minister said it would help the economy and promised to protect the country's central bank independence. In central and eastern Europe, the Polish zloty was flat against the euro after data showed the country's retail sales at constant prices slipped for the first time in two years in January. Broader EM stocks fell 1.0% on concerns around the pace of China's economic recovery as well as geopolitical tensions. Key Latin American stock indexes and currencies at 1400 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 995.66 -0.95 MSCI LatAm 2265.90 0.01 Mexico IPC 0.00 0 Chile IPSA 5342.40 0.22 Argentina MerVal 248979.37 -3.214 Colombia COLCAP 1210.92 0.09 Currencies Latest Daily % change Mexico peso 18.3586 0.06 Chile peso 793.6 0.66 Colombia peso 4936.75 -0.46 Peru sol 3.8342 0.18 Argentina peso 193.1900 -0.19 (interbank) Argentina peso 373 1.07 (parallel) (Reporting by Amruta Khandekar in Bengaluru Editing by Mark Heinrich)
