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Poll: Brazil's c.bank to leave rates at six-year high
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Brazil's Finance Ministry cuts 2023 GDP forecast
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Colombia's economic growth surprises upwards in Jan
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Latam stocks down 0.9%, FX flat
(Updates prices throughout; adds details, comments)
By Shreyashi Sanyal and Ankika Biswas
March 17 (Reuters) - Latin American stocks and
currencies fell on Friday at the end of a tumultuous week when
more large lenders exacerbated fears of a global banking crisis,
prompting investors to flee riskier assets.
The MSCI's index for Latin American equities declined 0.9%, falling for six of the last seven trading sessions and set to clock its worst weekly performance in nine months.
Brazil's Bovespa stock index , which houses some of central and south America's biggest lenders, shed 1%.
Unibanco Holding SA , Banco do Brasil SA , Bradesco SA and BTG Pactual SA fell over 2%. Sentiment remained fragile after a roller-coaster week sparked by the failure of Silicon Valley Bank in the U.S. and concerns over the future of Swiss lender Credit Suisse despite a $54 billion lifeline from Switzerland's central bank.
"Latam markets are going to be volatile as long as concerns in the U.S. and Europe are not mitigated, but again it's just going to be a reflection of what is happening externally," said Alfredo Coutinho, director of Moody's Analytics for Latin America.
On the brighter side, analysts, including Coutinho, have noted that better fundamentals mean Latam financial institutions should be relatively resilient compared to their global peers.
Stocks in Mexico , Latin America's second-largest economy, fell 0.8%. Mexico is also closely integrated with the U.S. economy, relying on a steady stream of remittances and trade. Most major Latin American currencies also slid against a weakening dollar , even though markets now expect the Federal Reserve to raise interest rates by only 25 basis points next week. Prior to the banking crisis fears, there was widespread speculation the U.S. central bank could deliver a 50-basis-point hike.
Chile's peso slipped 0.5% as investors assessed two tough weeks for the country that included a magnitude 5.6 earthquake and the rejection of a proposed tax reform meant to finance key elements of President Gabriel Boric's leftist agenda. "Rejection may lead to moderation in reforms, spending and tax burden. But this also reflects governability issues amid a highly fragmented Congress," Sebastian Rondeau, Latam economy and fixed income strategy director at Bank of America.
Brazil's real dropped 0.7%, Mexico's peso fell 1% and Peru's sol slipped 0.4%. A Reuters poll showed Brazil's central bank will dig in its heels on its hawkish stance next week by leaving the country's benchmark interest rate at a six-year high while likely dismissing hopes for any imminent policy easing. Data showed Brazil's jobless rate rose to 8.4% in the three months through January, slightly above market expectations. Further, the country's Finance Ministry reduced its estimates for economic growth this year, mentioning the impact of higher basic interest rates on activity and credit, and reduced liquidity in the U.S. On the other hand, Colombia's economic activity grew 5.85% on year in January, surprisingly on the upside amid signs of a slowdown in the South American country, Among other emerging markets, Russia's central bank held its key interest rate at 7.5%, maintaining its hawkish rhetoric. The rouble was up 0.9%.
Key Latin American stock indexes and currencies at 1920 GMT:
Stock indexes Latest Daily %
change
MSCI Emerging Markets 951.50 1.08 MSCI LatAm 2082.01 -0.93
Brazil Bovespa 102356.56 -1.04
Mexico IPC 52095.48 -0.78
Chile IPSA 5112.03 -1.64 Argentina MerVal 220949.40 -1.092
Colombia COLCAP 1113.80 -0.41 Currencies Latest Daily %
change
Brazil real 5.2763 -0.73
Mexico peso 18.8917 -1.00
Chile peso 826.8 -0.53
Colombia peso 4840.09 -0.32
Peru sol 3.7881 -0.35
Argentina peso (interbank) 203.3300 -0.19 Argentina peso (parallel) 379 1.06 (Reporting by Shreyashi Sanyal and Ankika Biswas in Bengaluru;
Editing by Paul Simao and Josie Kao)
