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Latam FX rises 8.2% in Q1 vs. 1.8% gain in EM currencies
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Mexican peso leads quarterly gains across Latam
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Chile's Codelco profit slumps, eyes stable 2023 copper
production
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Peru's sol lags broader Latam gains in Q1
(Adds comment; updates prices, details)
By Shreyashi Sanyal and Bansari Mayur Kamdar
March 31 (Reuters) - Most major Latin American
currencies strengthened on Friday as the dollar pared gains
after U.S. inflation showed signs of cooling, with the MSCI's
index heading for its best quarterly performance in a year.
The MSCI's index for Latin American currencies rose 0.8%, tracking gains of over 8% for the quarter given their high-yielding nature and the reopening of China, a crucial trading partner for the region.
The MSCI's broader EM currencies index was set to rise 1.8% for the first quarter.
Among Latam currencies, the Mexican peso was the biggest gainer in the first three months of the year, jumping nearly 8% and set for its best quarter since December 2020.
"We firmly believe Mexico is benefiting from a strong macroeconomic story that should allow the MXN (Mexican peso) to continue strengthening over the medium term despite that it is already one of the most fairly valued currencies in the EM universe," Paul Mackel, global head of FX Research at HSBC, said in a note.
Brazil's real firmed 0.4%, and was up 4.2% for the quarter. Its finance ministry on Thursday unveiled a much-awaited proposal for new fiscal rules to balance limits on spending growth with the government's vow to boost social programs and public investment.
Helping boost currencies on the day was a weaker dollar as data showed U.S. personal consumption expenditure growth slowed in February, supporting hopes of a softer monetary policy approach from the Federal Reserve. Peru's sol rose 0.4%. Political turmoil and civil unrest since the start of the year have hindered gains for sol during the quarter, up about 1.2%.
However, Chile's peso shed 0.7%, set to snap its four-day winning streak against the greenback, after data showed copper output in the world's largest producer fell 3.7% in February. "It seems that traders believe the central bank will delay any cuts to interest rates until later if there is lower inflation accompanied with deteriorating employment or growth data," said Juan Perez, director of trading at Monex.
"The Chilean peso has managed to climb as an economy that was perceived as very hurt last year that is now at less risk as China and other nations go back to their pre-pandemic trading."
Nevertheless, it was on track to add 6.5% in the first three months of the year as the demand outlook from top copper consumer China showed signs of improvement.
Chilean state-owned copper producer Codelco expects to roughly maintain copper production levels in 2023, its chief executive said, amid ongoing maintenance of a key smelter and after recording a 63% slump in its 2022 pre-tax profit.
Key Latin American stock indexes and currencies at 1815 GMT:
Stock indexes Latest Daily %
change
MSCI Emerging Markets 989.01 0.33 MSCI LatAm 2191.79 -0.57
Brazil Bovespa 101614.80 -2.02
Mexico IPC 54026.41 -0.32
Chile IPSA 5337.21 0.53
Argentina MerVal 246718.54 -1.955
Colombia COLCAP 1159.17 1.12
Currencies Latest Daily %
change
Brazil real 5.0750 0.44
Mexico peso 18.0287 0.26
Chile peso 794.4 -0.65
Colombia peso 4647.5 -0.22
Peru sol 3.7574 -0.23
Argentina peso (interbank) 208.9800 -0.19 Argentina peso (parallel) 390 0.77 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
1Q23 EM currency performance versus USD ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Shreyashi Sanyal, Shashwat Chauhan and Bansari
Mayur Kamdar in Bengaluru; Editing by Mark Potter and Jonathan
Oatis)
