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Brazilian real hits two-month high
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Mexican peso dips, lowest in a week
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Chile's peso falls a day after cbank decision
By Shashwat Chauhan and Shreyashi Sanyal April 5 (Reuters) - Brazil's real rose on Wednesday after positive data and on optimism about a new fiscal framework, while Mexico's peso lagged its regional peers on worries of a fallout from a slowdown in the U.S. economy.
Brazil's real gained 0.8% against the dollar, hitting its highest level in two months, also boosted by a softer dollar as more data pointed to the U.S. economy losing steam. Brazil central bank governor Roberto Campos said the fiscal efforts made so far by President Luiz Inacio Lula da Silva's government are positive and have eliminated the risk of a "more uncoordinated" debt trajectory. "The new fiscal framework is credible and aims reduce the fiscal deficit," said Elizabeth Johnson, head of TS Lombard's Brazil research team in a note. Johnson said that unlike the previous government's spending cap rule, which prohibited increases in government spending other than during a "state of emergency", the new rule will allow the government to increase primary spending by up to 70%.
Data showed that Brazil's services sector rebounded and returned to growth in March at the strongest pace in five months. The Mexican peso fell 1% against the dollar, hitting its lowest level in a week earlier in the day. Data showed consumer prices slowed more than expected in the year to March after the Mexican central bank had hiked its key interest rate last week, though had taken dovish tone on future moves. "The way Mexico is positioned, their economy is going to be dependent on working and trading with the US and that will take a hit, that will be weighed down by the recession that will hit the U.S," said Edward Moya, senior market analyst at Oanda. Chile's peso fell 0.9% against the dollar, a day after its central bank maintained its interest rate at 11.25%. The Central Bank of Chile set the performance of the economy for 2023 at between -0.5% and +0.5% amid the slowdown in activity after the rapid recovery from the COVID-19 pandemic, up from its previous forecast of a decline in activity of between 0.5%-1.75%. The Colombian peso extended gains to a third straight day, edging 0.1% higher as oil prices remained stable after a surprise production cut by OPEC+ on Sunday boosted oil prices. Data showed Colombian inflation rose slightly above expectations in March. MSCI Latin American stocks index lost 0.2%, dragged lower by an over 1% drop in Brazil's Bovespa .
Meanwhile, the Polish zloty weakened 0.3% against the euro after its central bank held interest rates at 6.75%.
Key Latin American stock indexes and currencies at 1516 GMT:
Stock indexes Latest Daily % change MSCI Emerging Markets 986.76 -0.09 MSCI LatAm 2162.15 -1.17 Brazil Bovespa 100127.11 -1.71 Mexico IPC 53984.37 -0.35 Chile IPSA 5219.14 -0.13 Argentina MerVal 248001.97 -1.386 Colombia COLCAP 1172.95 -0.47 Currencies Latest Daily % change Brazil real 5.0491 0.65 Mexico peso 18.3300 -1.16 Chile peso 811.8 -0.42 Colombia peso 4574.85 0.13 Peru sol 3.7701 -0.25 Argentina peso 211.2300 -0.20 (interbank) Argentina peso 387 1.29 (parallel) (Reporting by Shashwat Chauhan and Shreyashi Sanyal in Bengaluru Editing by Marguerita Choy)
