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Brazil's industrial output up 1.1% in March, above
forecasts
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Brazil central bank sees no financial stability risk
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Chile Senate committee approves mining royalty bill
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S&P says El Salvador debt exchange constituted default
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Latam FX, stocks up 1.1% each
(Updates prices throughout, adds details)
By Bansari Mayur Kamdar and Ankika Biswas
May 10 (Reuters) -
Latin American currencies hit an over eight-year high on Wednesday against a weakening dollar after data showed lower-than-expected annual U.S. inflation, supporting hopes that the U.S. Federal Reserve could soon pause its interest rate hikes. U.S. consumer prices slowed to below 5% in April for the first time in two years, while a key inflation measure monitored by the Fed subsided. The MSCI index of Latam currencies was up 1.1%, hitting its highest level since Oct. 9, 2014. "The broad message is that overall inflation is slowing and that should give the FOMC grounds to keep (U.S.) interest rates unchanged when it next meets on 14 June," said Daniel Casali, chief investment strategist at wealth manager Evelyn Partners.
Brazil's real and the Mexican peso gained by 0.7% and 1.1%, respectively, against the dollar.
Also helping the real, data showed industrial production in Brazil rose 1.1% in March from February. Meanwhile, Brazil's central bank said that bank profitability would continue to face challenges in the medium term as credit risk remains high. However, it said stress tests showed no relevant risk to financial stability in Brazil. Peru's sol jumped 0.6% to an almost one-year high, gaining for the fifth straight session. However, the country's central bank President Julio Velarde
noted that economic growth in the first quarter "could even be negative," although still expecting zero growth, echoing a previous forecast.
Chile's peso edged 0.2% higher against the greenback, with a significant decline in the price of copper, the country's main export, capping gains in the currency. Also aiding sentiment was the Chilean government forecasting an annual economic growth at 0.3% this year, reversing a previous estimate of a 0.7% contraction. Traders also monitored latest developments on the U.S. debt ceiling deadlock, with President Joe Biden piling pressure on Republican lawmakers to move quickly to raise the country's $31.4 trillion debt ceiling or risk throwing the economy into a recession. Latin American stocks advanced 1.1% to a three-week high, with higher oil and metal prices supporting commodity-heavy stocks.
Ratings agency S&P on Tuesday said a pension debt exchange by El Salvador in April constituted a default event, but added that new terms had remedied the default.
Key Latin American stock indexes and currencies:
Stock indexes Latest Daily %
change
MSCI Emerging Markets 980.59 -0.17 MSCI LatAm 2304.27 1.14
Brazil Bovespa 107525.08 0.38
Mexico IPC 55544.46 0.17
Chile IPSA 5558.19 0.13 Argentina MerVal 309526.81 0.57
Colombia COLCAP 1159.72 0.02 Currencies Latest Daily %
change
Brazil real 4.9503 0.74
Mexico peso 17.5606 1.06
Chile peso 788.2 0.20
Colombia peso 4547.5 0.42
Peru sol 3.6551 0.63
Argentina peso (interbank) 228.5000 -0.15 Argentina peso (parallel) 467 0.86 (Reporting by Bansari Mayur Kamdar and Ankika Biswas in
Bengaluru; Editing by Alexander Smith and Marguerita Choy)
