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EM stocks hit lowest since early Jan
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Fed meeting minutes on tap
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Indian inflation remains high- MPC minutes
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Latam stocks, FX muted
By Amruta Khandekar and Bansari Mayur Kamdar Feb 22 (Reuters) - Emerging market stocks hit a near seven-week low on worries around the U.S. rate hike trajectory ahead of the Federal Reserve's meeting minutes while Mexico's peso rose as investors awaited inflation data from the country later in the week. MSCI's index for EM equities fell 1.2% at 1454 GMT, hitting its lowest since early January. Minutes from the Fed's latest meeting due at 1900 GMT could offer further clarity on the central bank's future monetary tightening plans at a time when data pointing to surprising strength in major global economies has spurred fears of interest rates staying higher for longer. "Markets are nervous about the Fed, but policymakers ultimately face limits. Despite Chair (Jerome) Powell's uncompromising rhetoric, the Fed has already pivoted to smaller hikes and the next pivot to stopping the rate hikes will be more consequential for markets," said Andres Abadia, chief Latin American economist at Pantheon Macroeconomics. Meanwhile, Latin American stocks and currencies were muted against the dollar.
Oil exporter Mexico's peso which has been one of the strongest performing currencies in the Latam region this year rose 0.5% against the greenback despite lower crude prices. Inflation data from the country as well as minutes from the Bank of Mexico's February monetary policy meeting when it raised rates by a greater-than-expected 50 basis points are due on Thursday. "We (and markets) are awaiting Mexican inflation data tomorrow as well as Banxico’s February meeting minutes before considering further gains in the MXN," wrote Juan Manuel Herrera, senior economist at Scotiabank in a note. Another 50 basis point rate hike is likely from the Bank of Mexico next month, Herrera added. Chile's peso rose 0.5%, snapping a two-day losing streak, while the Peruvian sol was flat. Markets in Brazil were partially closed and set to open at 11:00 am ET (1600 GMT). Elsewhere in emerging markets, South Africa's rand strengthened against the U.S. dollar, after the finance minister said in his 2023 budget speech that the government would take on more than half of the state utility's debt. Price pressures in India remain high and it would be premature to lower the guard on inflation, a majority of the members of the Reserve Bank of India's (RBI) monetary policy committee (MPC) said, according to minutes published on Wednesday. Key Latin American stock indexes and currencies at 1454 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 983.69 -1.16 MSCI LatAm 2255.58 0.03 Brazil Bovespa 0.00 0 Mexico IPC 53260.44 0.04 Chile IPSA 5283.11 0.41 Argentina MerVal 247568.49 -0.567 Colombia COLCAP 1195.25 -0.24 Currencies Latest Daily % change Brazil real 5.1610 -0.02 Mexico peso 18.3598 0.45 Chile peso 797.7 0.49 Colombia peso 4918.65 0.71 Peru sol 3.8197 0.05 Argentina peso 194.9700 -0.90 (interbank) Argentina peso 373 1.07 (parallel) (Reporting by Amruta Khandekar and Bansari Mayur Kamdar in Bengaluru; Editing by Andrea Ricci)
