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Hungary c.bank to keep 13% base rate "for prolonged
period"
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MSCI's Latam FX index rises for seventh straight day
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Brazil's Hapvida surges after capital injection
By Shreyashi Sanyal March 28 (Reuters) - Latin American currencies rose as the dollar weakened on Tuesday after fears of an imminent banking crisis ebbed, while Hungary's forint jumped as its central bank held rates steady and said a cut was not on the cards.
The forint firmed nearly 1% hitting a two-week high of 381.13 against the euro after the National Bank of Hungary (NBH) held its base rate at 13%, the highest in the European Union, and said it will need to be kept for a prolonged period.
NBH Central bank Deputy Governor Barnabas Virag said the pace of disinflation in Hungary could quicken after March, although a cut is not on the agenda. "The base rate is unlikely to be cut until near the end of this year – our current forecast is for the first reduction in September, but we think November now seems a bit more likely," said Nicholas Farr, emerging Europe economist at Capital Economics.
Data earlier in the day showed Hungary's gross average wages grew 16.1% year-on-year in January, trailing sky-high inflation. The MSCI's index for Latam currencies rose 1.2%, gaining for the seventh consecutive session and now on track for its third straight quarterly rise.
Resource-rich Latin American assets have benefited from their high exposure to commodities, prices of which have risen since the beginning of the year.
Brazil's real added 0.7% against a weakening dollar, with investors taking solace from the fact that no further cracks have emerged in global banking in recent sessions.
Minutes from Brazil's central bank meeting held last week showed that worsening inflation expectations justified its decision to maintain a hawkish stance towards future steps. This comes after the central bank held the Selic rate at 13.75%, without presenting a concrete sign of eventual monetary easing ahead, contrary to expectations in the market and the government.
"The concern with the de-anchoring of inflation expectations prevailed, and these minutes confirm that BCB does not seem nearly inclined to suggest an imminent easing," said Cassiana Fernandez, head of Latin America economic research at JP Morgan. Chile's peso rose 0.9%, while Peru's sol firmed 0.6% as prices of their main export, copper, rose.
A rise in oil prices lifted currencies of Mexico and Colombia by about 0.4%. Stocks in the Latin America surged with the main index jumping 2% to a two-week high.
Brazil stocks gained 1.5%, with healthcare company Hapvida Participacoes e Investimentos SA surging 16% after on announcing funding measures backed by its controlling shareholders.
Key Latin American stock indexes and currencies at 1508 GMT:
Stock indexes Latest Daily
%
change
MSCI Emerging Markets 970.87 0.71
MSCI LatAm 2145.95 2.27
Brazil Bovespa 101143.1 1.48
9
Mexico IPC 53461.89 1.16
Chile IPSA 5271.76 0.26
Argentina MerVal 235470.0 0.74
1
Colombia COLCAP 1116.56 -0.15
Currencies Latest Daily
%
change
Brazil real 5.1753 0.59
Mexico peso 18.2495 0.46
Chile peso 797.4 1.13
Colombia peso 4646.8 0.56
Peru sol 3.7614 -0.10
Argentina peso (interbank) 207.8200 -0.18 Argentina peso (parallel) 390 0.00
(Reporting by Shreyashi Sanyal in Bengaluru; Editing by
Alexandra Hudson)
