*
Oil, copper rise following ECB, Fed moves
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Brazil c. bank keeps rates at 13.75%, nods to fiscal
policy
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Argentina's FX reserves hit 2016 lows on drought impact
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Brazil's Supreme Court clears the way for tax decision
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Colombia c. bank sees higher interest rate than market
(Adds analyst comments, market details, updates prices)
By Shreyashi Sanyal and Bansari Mayur Kamdar
May 4 (Reuters) - Currencies of resource-rich Latin
America tracked higher commodity prices on Thursday following
central bank decisions from Europe and the U.S., with Brazil's
real reversing earlier declines.
Currencies of copper producers Chile and Peru rose 0.5% and 0.2%, respectively, supported by firm red-metal prices after the U.S. Federal Reserve signaled a pause on rate hikes on Wednesday.
Oil prices rose after the European Central Bank (ECB) decided to slow the pace of interest rate hikes, helping lift units of exporters including Mexico and Colombia by 0.2% and 0.8% respectively.
Interest rates will need to be higher than projected by the market in order to bring persistent inflation down to its long-term target, the technical team of Colombia's central bank said on Wednesday. Brazil's real erased falls from earlier in the session to rise 0.1% a day after its central bank's rate-setting committee, known as Copom, held its key interest rate at a six-year high of 13.75% and added the government had eased concerns about fiscal policy with proposed new budget rules. "Many EM central banks had paused tightening cycles before the Fed this week, so I think the Fed signaling a potential pause reinforces that EM tightening cycles are indeed over and the need to resume rate hikes has dissipated," said Brendan McKenna, international economist at Wells Fargo.
"EM, at least from a currency perspective, has done quite well this year on expectations for a Fed slowdown and eventual pause. With the Fed now likely on hold, the EM FX strengthening trend is likely to continue going forward."
Brazilian Supreme Court Justice Andre Mendonca cleared the way for the implementation of a high-profile judgment on tax benefits, seen as key to government efforts to balance public finances. Brazil's stocks rose 0.4%, with state-run oil company Petrobras adding 1.6% after its production report.
Embraer SA widened its net loss in the first
quarter from a year ago, driving its shares 9.7% lower.
Argentina's peso rose to 463 per dollar in parallel
markets.
Argentina is seeking new easing of targets in its $44 billion deal with the International Monetary Fund and faster payouts, and is pushing to get key IMF members the United States and Brazil to support it, government officials said. Data showed Argentina's central bank reserves are at their lowest level in almost seven years, as a painful drought stymies key grains exports and a weak peso forces authorities to spend dollars to support it.
Key Latin American stock indexes and currencies at 2047 GMT:
Stock indexes Latest Daily
%
change
MSCI Emerging Markets 976.36 0.7
MSCI LatAm 2185.52 -0.23
Brazil Bovespa 102174.3 0.37
4
Mexico IPC 54667.21 -0.51
Chile IPSA 5376.42 0.08
Argentina MerVal 281752.4 -2.457
9
Colombia COLCAP 1158.60 -0.01
Currencies Latest Daily % change Brazil real 4.9844 0.14 Mexico peso 17.9013 0.08 Chile peso 798.7 0.63 Colombia peso 4604.5 0.68 Peru sol 3.7028 -0.13 Argentina peso (interbank) 225.6500 -0.20 Argentina peso (parallel) 463 1.30
(Reporting by Bansari Mayur Kamdar and Shreyashi Sanyal in Bengaluru; Additional reporting by Lisa Pauline Mattackal Editing by Jonathan Oatis and Matthew Lewis)
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