*
Argentina central bank hikes rate 1,000 bps to 91%
*
New Colombia minister seeks to calm market as bonds, peso
suffer
*
Brazil's services activity up 1.1% in February, beats
forecasts
(Adds market analyst comments, updates prices throughout)
By Bansari Mayur Kamdar and Shreyashi Sanyal
April 27 (Reuters) - Colombia's peso slipped on
Thursday, extending losses following the surprise ouster of
Finance Minister Jose Antonio Ocampo, while Argentina's central
bank hiked its interest rate by the most in four years to steady
a weakening peso in black market trading.
The peso was flat, a day after losing over 3% as President Gustavo Petro replaced Ocampo with Ricardo Bonilla in a cabinet reshuffle. The premium investors demand to hold the country's international bonds widened 21 basis points to 430 bps, the largest daily widening in six months, JPMorgan data showed . "Investors are clearly worried given that Ocampo was one of the most moderate figures in the government and key in keeping investors on board since Petro became president," said Kimberley Sperrfechter, emerging markets economist at Capital Economics.
"This is especially worrying given the country's large external financing needs and may force the central bank to keep monetary tighter for longer." Argentina's central bank hiked its benchmark interest rate 10 percentage points to 91%, as it tries to tame high inflation and steady the peso currency, which has tumbled in black market trading. The hike was the biggest since a market meltdown in August 2019. The Argentinian peso rose 2.6% to 462 per dollar in parallel markets. "The central bank has effectively run out of reserves, and with inflation above 100%, the incentive to hold pesos has deteriorated again," said Brendan McKenna, international economist and FX strategist at Wells Fargo. "There is a growing devaluation risk in Argentina." The MSCI's index for Latin American currencies rose 1%, with the Brazilian real leading regional gains1, rising 1.2%. Ahead of Brazil's next monetary policy decision next week, Finance Minister Fernando Haddad expressed apprehension about the economic impact of high interest rates, while central bank chief Roberto Campos Neto continued to emphasize inflation concerns. Campos Neto also said the economic slowdown is in line with expectations.
Data showed services activity in Brazil rose 1.1% in February from the previous month, beating expectations. Shareholders of Brazil's Petrobras approved the new members the state-run oil firm's board of directors. Shares of Petrobras fell a little over 2%. The Chilean peso and Peruvian sol added 0.3% and 0.5%, respectively, while the Mexican peso rose 0.6%. Stocks in Latin America advanced 1.5% tracking global market gains, snapping their four-day losing streak. Elsewhere in emerging markets, Turkey's central bank (CBRT) kept its policy rate at 8.5%, as expected, in its last policy meeting before the May 14 elections. It stressed the importance of supportive financial conditions to preserve economic growth momentum.
Latin American stock indexes and currencies at 1931 GMT:
Stock indexes Latest Daily
%
change
MSCI Emerging Markets 972.58 0.49
MSCI LatAm 2225.80 1.54
Brazil Bovespa 102611.4 0.29
4
Mexico IPC 54357.02 0.62
Chile IPSA 5406.13 1.51
Argentina MerVal 296627.8 -2.68
1
Colombia COLCAP 1155.67 -2.52
Currencies Latest Daily
%
change
Brazil real 4.9822 1.53
Mexico peso 18.0427 0.52
Chile peso 800.5 0.41
Colombia peso 4659 -0.03
Peru sol 3.7137 0.12
Argentina peso (interbank) 222.0000 -0.19
Argentina peso (parallel) 462 2.60
(Reporting by Bansari Mayur Kamdar and Shreyashi Sanyal in
Bengaluru; Editing by Richard Chang and Grant McCool)
