The peso weakened 0.9%, while Mexico's peso shed 0.3% as the safe-have dollar rose amid nervousness after European banking stocks including Deutsche Bank and UBS Group were pummeled by worries that the worst problems to hit the sector since the 2008 financial crisis have not yet been contained.
"There is little explanation for the unadulterated anxiety that European markets opened with this morning," said Juan Manuel Herrera, senior strategist at Scotiabank.
Still, both currencies were set for weekly gains, with the broader MSCI Latin American FX index eyeing its best weekly performance in nearly a month after rising 1.3%.
Currencies of resource-rich Latin America, have benefited from a largely weaker dollar this week and rising commodity prices in the face of the U.S. Federal Reserve signaling that it was on the verge of pausing its interest rate increases.
Brazil's real was an outlier on the day, rising nearly 1%, reversing falls from earlier in the session. The currency is also set for its first weekly gain in three.
The country's consumer prices rose slightly more than expected in the 12 months to mid-March, according to data, further dashing expectations that the country's central bank might ease monetary policy soon. Brazil's central bank held the Selic benchmark interest rate at 13.75% on Wednesday, for the fifth straight meeting.
Focus will now shift on Brazilian President Luiz Inacio Lula da Silva's proposal for new fiscal rules, an announcement that was delayed till after his trip to China.
But Lula was diagnosed with mild pneumonia and will delay his departure to China until Sunday.
In Mexico, data showed its economy grew 0.6% in January from December and expanded 4.4% from January of 2022. "Mexican data to start the year have been solid and would support continued tightening from Banxico," Herrera said.
Next week, Colombia's central bank board is seen raising the interest rate to 13% in a bid to tamp down on inflationary pressures, in what could be the final rise in a long tightening cycle, a majority of analysts polled by Reuters said.
Key Latin American stock indexes and currencies at 1600 GMT:
Stock indexes Latest Daily
%
change
MSCI Emerging Markets 971.89 -0.6
MSCI LatAm 2077.82 0.51
Brazil Bovespa 98932.59 1.03
Mexico IPC 52576.99 -0.48
Chile IPSA 5237.05 -0.73
Argentina MerVal 219276.7 -2.507
4
Colombia COLCAP 1092.68 -0.39
Currencies Latest Daily
%
change
Brazil real 5.2457 0.81
Mexico peso 18.4954 0.31
Chile peso 810.1 -0.51
Colombia peso 4724.65 0.63
Peru sol 3.767 -0.28
Argentina peso (interbank) 205.7500 -0.18 Argentina peso (parallel) 385 1.56
(Reporting by Shreyashi Sanyal in Bengaluru
Editing by Marguerita Choy)
