*
Brazil's GDP dropped in Q4, consolidating economic
slowdown
Petrobras shares fall after quarterly results
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Mexican President to launch plan to tame inflation
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Latam FX down 0.3%, stocks off 0.1%
(Updates prices, details)
By Amruta Khandekar and Bansari Mayur Kamdar
March 2 (Reuters) - Latin American currencies slipped
against a strong dollar on Thursday on concerns the Federal
Reserve will keep tightening monetary policy for longer, while
Brazil's real slipped after data showed the region's biggest
economy shrank in the fourth quarter.
Currencies in the region inched 0.1% lower
against a resilient greenback, with a fall in U.S. jobless
claims adding to evidence of a strong economy which could keep
the Fed firmly on an aggressive rate hiking path.
"In the near term, we are expecting Latin American assets to
be rangebound as markets further digest the fact that rates are
going to be higher for longer in the U.S.," said Pedro
Quintanilla Dieck, senior emerging markets strategist for UBS
Global Wealth Management.
"That being said, over the course of the year, we are fairly
constructive. Around the second half (of the year), according to
markets, the Fed will be pausing its rate hiking cycle and this
coupled with the high carry in Latin American currencies will
also be supportive."
The Brazilian real dipped 0.5% as data showed the
economy shrank in the fourth quarter, affected by industry
weakness, casting a shadow over the 2023 outlook amid higher
borrowing costs.
Finance Minister Fernando Haddad said he does not expect a
technical recession, ruling out another contraction in the
current quarter, but said Brazil's interest rate of 13.75% was
hurting the country.
MSCI's index of Latin American stocks had
slipped 0.3% by 1825 GMT with Brazil's Bovespa flat
after four straight sessions of losses.
Shares of Brazil's Petrobras fell 1% after the
state-run oil company on Wednesday posted upbeat quarterly
earnings but proposed trimming its usually robust dividend.
President Luiz Inacio Lula da Silva criticized the payouts
and said the company should have invested more in the country's
growth.
Colombia's peso bucked the trend, rising 0.4% to
4809.1 against the dollar. The currency has fallen marginally
this year after dropping nearly 16% against the greenback in
2022.
The peso is poised to outperform other major emerging market
currencies over the next few years, as elevated crude prices in
2024 support the oil exporter's trade and with monetary policy
likely remaining restrictive for longer, Jonathan Peterson,
senior markets economist at Capital Economics wrote in a note.
Mexico's peso edged 0.1% lower. President Andres
Manuel Lopez Obrador said he will launch a plan to tame
inflation with other Latin American governments.
Chile's peso slipped 0.2% as copper prices retreated
on a firmer dollar and the prospect of more U.S. sanctions on
top metals consumer China. Key Latin American stock indexes and currencies at 1825 GMT:
Stock indexes Latest Daily %
change
MSCI Emerging Markets 980.04 -0.42
MSCI LatAm 2202.73 -0.26
Brazil Bovespa 104293.47 -0.09
Mexico IPC 53475.71 0
Chile IPSA 5374.96 -0.01
Argentina MerVal 246299.86 -1.314
Colombia COLCAP 1195.43 -0.29
Currencies Latest Daily %
change
Brazil real 5.2056 -0.28
Mexico peso 18.1208 -0.16
Chile peso 812.5 -0.32
Colombia peso 4809.1 0.39
Peru sol 3.7797 -0.04
Argentina peso (interbank) 197.8600 -0.15 Argentina peso (parallel) 372 0.81
(Reporting by Amruta Khandekar and Bansari Mayur Kamdar;
Editing by Sharon Singleton, Kirsten Donovan)
