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Brazil's real falls, but set to gain for fourth straight
week
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Peru' sol gains after c.bank holds rates
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Latam FX down 0.7%, stocks fall 0.1%
By Shashwat Chauhan and Bansari Mayur Kamdar April 14 (Reuters) - Most Latin American currencies fell against the dollar on Friday as the dollar recovered on U.S. interest rate hike fears, while the Peruvian sol outpaced regional peers after its central bank held rates steady overnight for third straight time.
The MSCI's Latin American currencies index fell 0.7% by 1450 GMT. The dollar bounced off a one-year low against a basket of currencies after data showed U.S. retail sales fell in March, while a key Fed official warned that the U.S. central bank needs to continue hiking interest rates to bring down inflation. "We think perhaps one more Fed hike and that's most likely the top of the cycle ... likely the dollar will remain relatively soft or worse range bound and that's potentially good for emerging markets," said Jon Harrison, managing director of EM macro strategy at TS Lombard. "Emerging markets are also exposed to U.S. equities, so if we do get a very deep recession, that will be negative for emerging markets so we're seeing conflicting signals at the moment." Bucking the trend, Peru's sol gained 0.2% against the greenback after its central bank kept its benchmark interest rate unchanged at 7.75% on Thursday.
"We anticipate that the MPC will maintain a restrictive monetary policy stance at least through the start of 2H2023, avoiding the temptation of premature easing of the policy stance," said economists at Goldman Sachs.
Brazil's real fell 0.6% against the dollar though was set to finish the week in the green for the fourth straight time. Data showed services activity in Brazil fell 3.1% in January from the previous month.
The Colombian peso slipped 0.1% against the dollar, snapping a nine-day winning streak, while Mexico's peso shed 0.3%. The head of Mexico's mining chamber on Thursday issued a stark warning against a proposed overhaul of the country's mining laws, saying this could cost the country some $9 billion in lost investment in coming years and up to 420,000 direct jobs. The Chilean peso eased 0.3% against the dollar. Latin American stocks fell 0.9%, dragged lower by a 0.6% slide in Brazil's Bovespa stock index. Later in the day, investors would be on the lookout for retail sales and industrial output data from Colombia and monthly inflation data out of Argentina. Elsewhere in emerging markets, Israel's shekel fell 0.6% against the dollar after data showed inflation eased to 5%, its lowest level since September 202. Pakistan's international bonds rose as much as 2.5 cents to trade between 36.4 cents and 48.5 cents on the dollar, data from Tradeweb showed, after the United Arab Emirates confirmed financial support of $1 billion. Key Latin American stock indexes and currencies at 1450 GMT:
Stock indexes Latest Daily % change MSCI Emerging Markets 999.67 0.26 MSCI LatAm 2285.36 -0.9 Brazil Bovespa 105800.82 -0.62 Mexico IPC 54506.34 -0.35 Chile IPSA 5393.75 0.75 Argentina MerVal 272877.27 0.943 Colombia COLCAP 1240.72 0.04
Currencies Latest Daily % change Brazil real 4.9585 -0.64 Mexico peso 18.0691 -0.39 Chile peso 798.2 -0.34 Colombia peso 4413.33 0.03 Peru sol 3.7794 -0.42 Argentina peso (interbank) 215.1000 -0.20 Argentina peso (parallel) 395 1.27 (Reporting by Shashwat Chauhan and Bansari Mayur Kamdar in Bengaluru; Editing by Richard Chang)
