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Powell reiterates hawkish rhetoric
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Chile's consumer prices unexpectedly fall in Feb
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Brazil's Gol Linhas jumps on Q4 net profit
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Poland leaves interest rates unchanged
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Latam FX touches one-month high, up 1%
(New throughout, updates prices, market activity and comments)
By Amruta Khandekar and Ankika Biswas
March 8 (Reuters) -
The Brazilian real led gains among most Latin American currencies on Wednesday as the U.S. dollar retreated from recent highs touched after hawkish remarks from Federal Reserve Chair Jerome Powell, while stocks jumped on a Brazilian share boost. MSCI's index of Latin American currencies rose nearly 1% at 2000 GMT, touching the highest in more than a month while broader EM currencies dropped 0.3%. The dollar slipped from three-month highs hit after Powell highlighted the central bank's readiness for larger rate hikes, fanning U.S. recession fears. On his second day of testifying before the House Financial Services Committee, Powell reaffirmed his message of higher and potentially faster rate hikes, but added that no call has been made yet on the size of rate rise at the March meeting. "We are still going to get a mixed bag when it comes to USD strength this year," said Juan Perez, director of trading at Monex USA. "While the U.S. dollar dominance emanates from having a strong economy that can add more in borrowing costs to it, things can also go sour in terms of a hard landing here not matching prosperity elsewhere and eventually, if not rapidly, that can negatively affect the buck." The Brazilian real jumped 1%. Investors are also awaiting the presentation of the country's new fiscal framework by Brazilian Finance Minister Fernando Haddad. "Our assessment is that government understands that out-of-control fiscal spending would be counterproductive, and we expect the new set of fiscal rules to be credible enough to help anchor longer-term fiscal expectations, paving the way for lower rates and sustained growth in the medium to longer term," said Wilson Ferrarezi, economist at TS Lombard in a note. Chile's peso also gained 0.1% after data showed the country's consumer prices unexpectedly fell in February, offering much-needed relief in the fight against inflation. Meanwhile, Chilean leftist President Gabriel Boric's government suffered a major setback after lawmakers refused to move forward with a proposed tax reform meant to finance key elements of the president's progressive agenda. The Peruvian sol slipped 0.4%, while Mexico's peso gained 0.6% against the greenback. Further, Argentina's industrial output rose 6.3% in January from a year ago and 0.7% from December. Latam stocks climbed 2.3%, with Brazil's Bovespa index gaining 1.8%, helped by a 1% rise in shares of state-run oil firm Petrobras . Among others, Brazilian airline Gol Linhas Aereas Inteligentes SA jumped 9% after reporting an unexpected fourth quarter net profit. Shares of Brazilian education companies YDUQS and Cogna also jumped after the government created a working group to discuss federal student loan program FIES. Elsewhere, Poland's central bank left its main interest rate unchanged at 6.75%, as expected, while Sri Lanka looked set to get a sign-off on a long-awaited $2.9 billion four-year bailout from the International Monetary Fund (IMF).
Key Latin American stock indexes and currencies at 2000 GMT:
Stock indexes Latest Daily %
change
MSCI Emerging Markets 978.04 -1.05 MSCI LatAm 2245.44 2.37
Brazil Bovespa 106192.00 1.88
Mexico IPC 53316.55 0.47
Chile IPSA 5416.39 0.24 Argentina MerVal 249919.09 1.387
Colombia COLCAP 1240.51 0.3 Currencies Latest Daily %
change
Brazil real 5.1350 1
Mexico peso 17.9866 0.57
Chile peso 804.6 0.07
Colombia peso 4775.15 -0.25
Peru sol 3.787 -0.41
Argentina peso (interbank) 199.9500 -0.14 Argentina peso (parallel) 373 -0.54 (Reporting by Amruta Khandekar, Editing by Nick Zieminski and
David Gregorio)
