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Mexico inflation slows in early Feb
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Banxico poised for lower rate hike - minutes
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Brazil's Federal tax revenue grows in Jan
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Lula 'very concerned' with growth amid high interest rates
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minister
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Latam FX up 0.4%, stocks up 0.7%
(Updates prices, adds details)
By Amruta Khandekar and Bansari Mayur Kamdar
Feb 23 (Reuters) -
Oil exporter Colombia's currency rose on Thursday supported by an uptick in crude prices, while the Mexican peso slipped as investors assessed lower than expected February inflation data and minutes from Banxico's meeting earlier last month.
The MSCI's index for Latin American currencies gained 0.4% by 1926 GMT. Colombia's peso jumped 0.8%, extending gains to a second straight day as oil prices firmed on expectations of steep cuts to Russian production next month. Mexico's peso slipped 0.1% against the greenback to 18.37. Minutes from Bank of Mexico's February meeting showed most of Banxico's board members considered its interest rate could be increased more moderately at the next monetary policy meeting. All five board members, nevertheless, expressed concern that core inflation was more persistent than expected.
Data released earlier in the day showed inflation in Latam's second largest economy decelerated more than forecast by analysts in early February. "There has been a repricing in terms of when and how aggressively central banks in the (Latam) region may start the easing cycle but in terms of continuing the hiking cycle, we only have Banxico that has surprised the market to the upside," said Luis Hurtado, director of Latam FX at CIBC Capital Markets. "The market is now pricing in around 75 to 100 basis points left in the tightening cycle. We are not expecting Banxico to increase rates that aggressively." Given the still challenging inflation backdrop, we anticipate a 25 bp hike at the March MPC meeting, said Goldman Sachs economists in a note, and see the door wide open for a follow-up hike in May. The Brazilian real added 0.4%, erasing some of its early gains.
Management Minister Esther Dweck said President Luiz Inacio Lula da Silva is very concerned with the resumption of economic growth, adding that high interest rates affect funding costs for companies and families. Data showed Brazil's federal tax revenue started the year with a monthly
record performance in January, following a surprising result in 2022
Weighing on the regional currencies index, Chile's peso eased 0.8% against the dollar but was still among the top performing Latin American currencies so far this year. Latin American stocks were up 0.7%. The broader emerging market stocks index rose 0.6% as investors looked past minutes from the U.S. Federal Reserve's latest meeting which signaled more rate hikes going ahead.
Turkey's central bank cut its main interest rate to 8.5%
from 9%, moving to cushion the economic impact of a devastating
earthquake that killed more than 43,000 people in country's
south.
Key Latin American stock indexes and currencies at 1926 GMT:
Stock indexes Latest Daily %
change
MSCI Emerging Markets 987.76 0.58 MSCI LatAm 2242.35 0.65 Brazil Bovespa 107110.05 -0.04 Mexico IPC 53116.33 -0.12 Chile IPSA 5312.57 1.03 Argentina MerVal 247825.89 1.27 Colombia COLCAP 1196.24 0.73 Currencies Latest Daily %
change
Brazil real 5.1320 0.74
Mexico peso 18.3686 -0.13 Chile peso 808.4 -1.25
Colombia peso 4855.25 0.78
Peru sol 3.7895 0.08
Argentina peso 195.3100 -0.18
(interbank) Argentina peso 375 0.53
(parallel) (Reporting by Amruta Khandekar and Bansari Mayur Kamdar;
Editing by Kirsten Donovan and Diane Craft)
