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Latam currencies briefly touch highest since November 2014
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Brazil's retail sales rise 3.8% in January, beat forecasts
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Latam FX up 1.1%, stocks up 1.7%
(Updates prices, adds details and comment)
By Shashwat Chauhan, Bansari Mayur Kamdar and Amruta
Khandekar
April 12 (Reuters) - Latin American currencies rose to
multi-year highs against a weaker dollar on Wednesday after
signs of cooling U.S. inflation lifted sentiment while minutes
from the Federal Reserve's last meeting did little to alter U.S.
rate hike expectations.
The MSCI's Latin American currencies index gained 1.1% by 1856 GMT, to its highest since 2018.
However, the index had pulled back from an over eight-year
high hit earlier in the session after a U.S. government report
showed a moderation in U.S. headline inflation in March,
fuelling hopes that the Fed would go easy on rate hikes.
Minutes from the Fed's March meeting showed several Fed
officials considered pausing rate increases until it was clear
the failure of two regional banks would not cause wider
financial stress. However, they ultimately concluded that taming
inflation remained the priority.
"We are still holding to our scenario in which the Fed is to
deliver a couple of 25 basis point hikes. That is close to what
the markets are expecting in Latam and that is why we are not
seeing a meaningful response to (the minutes)," said Joel Virgen
Rojano, senior Latam strategist at TD Securities.
Brazil's real jumped 1.5% against the dollar, after
briefly having breached the 5-real level.
Brazil's central bank chief Roberto Campos Neto said that
while inflation has decreased, persistent pressures remain. The
comments followed data on Tuesday showing a slower rise in
Brazil's March consumer prices which had fuelled hopes of
monetary easing.
Brazil's retail sector started 2023 stronger than expected
and with record high sales in January, data showed on Wednesday.
"Latam is still an attractive region in relative terms
because (of) high carry and because it has been surprising to
the upside regarding economic activity," said Rojano.
Peru's sol added 0.3% against the greenback ahead of
the Peruvian central bank's monetary policy decision on
Thursday.
"Although the MPC recently reaffirmed that the 'pause' at
the Feb. meeting did not necessarily imply the end of the
tightening cycle, we hold the view that the bar to resume
tightening is high," economists at Goldman Sachs said in a note.
The Mexican peso gained 0.5% and Colombia's peso jumped 1.0%, supported by firm oil prices. Both countries
are leading crude exporters. Colombian President Gustavo Petro said on Tuesday the
country's central bank could issue bonds to raise funds to pay
reparations to millions of victims of its nearly six-decade
conflict, citing a lack of other funding options.
The Chilean peso rose 0.6% against the dollar,
extending gains after it jumped more than 1% on Tuesday.
Latin American stocks advanced 1.7% to their highest level in over two months, with Brazilian shares up 1.6%. In Bolivia, President Luis Arce said on Tuesday the country may start exporting lithium batteries starting in 2026, as part of the government's plan to industrialize its vast resources of the white metal, a key component for powering electric vehicles.
Key Latin American stock indexes and currencies at 1856 GMT
Stock indexes Latest Daily % change
MSCI Emerging Markets 994.41 -0.18 MSCI LatAm 2304.33 1.73 Brazil Bovespa 107894.33 1.58 Mexico IPC 54124.86 -0.88 Chile IPSA 5350.83 0.83 Argentina MerVal 265985.37 2.316 Colombia COLCAP 1232.10 0.87 Currencies Latest Daily % change
Brazil real 4.9362 1.43
Mexico peso 18.0869 0.39 Chile peso 804.2 0.55
Colombia peso 4460.5 1.01
Peru sol 3.7654 0.09
Argentina peso 214.2300 -0.21
(interbank) Argentina peso 394 0.00
(parallel) (Reporting by Shashwat Chauhan, Bansari Mayur Kamdar and Amruta
Khandekar in Bengaluru; Editing by Paul Simao and Richard Chang)
