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Peruvian sol hovers near one-year highs
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Brazil CPI likely to have eased in April -poll
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Turkish assets rally after presidential candidate
withdraws
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Latam stocks down 0.9%, currencies fall 0.4%
By Amruta Khandekar May 11 (Reuters) - Most Latin American currencies eased on Thursday as the dollar firmed after weak data from China raised concerns about the country's economic recovery, but the Peruvian sol gained ahead of a local interest rate decision. MSCI's index of Latam currencies was down 0.4% by 1405 GMT, falling from an eight-year high touched on Wednesday after a slower-than-expected rise in annual U.S. inflation boosted hopes of a rate hike pause by the Federal Reserve.
Data on Thursday showed China's consumer prices rose at the slowest pace in more than two years in April, while factory gate deflation deepened, suggesting more stimulus may be needed to boost a patchy post-COVID economic recovery. Elsewhere, Turkey's stocks and dollar-denominated bonds rallied after presidential election candidate Muharrem Ince announced his withdrawal from the race, giving a potential boost to Kemal Kilicdaroglu, the main rival to President Tayyip Erdogan. Brazil's real fell 0.5% against the dollar ahead of inflation data expected on Friday. Consumer price inflation likely slowed in April, a Reuters poll showed, giving fresh ammunition to government officials demanding immediate monetary policy easing from a reluctant central bank.
Brazilian Finance Minister Fernando Haddad on Thursday called for greater use of local currencies in bilateral trade versus the U.S. dollar. Chile's peso , the currency of the world's biggest copper producer, fell 1.3% as prices of the metal hit a four-month low after the Chinese data stoked demand concerns. The country's central bank is set to announce its latest interest rate decision on Friday. The Mexican peso and Colombia's peso fell 0.8% and 0.9% respectively as crude prices slipped amid recession concerns driven by a political standoff over the U.S. debt ceiling. Both the countries are leading oil exporters. Bucking the trend, Peru's sol rose 0.2%, hovering near a one-year high ahead of a central bank policy decision, which is expected to see interest rates remain at 7.75%. "The rate has been unchanged since January, and the mild decline in yearly inflation in April was not nearly enough to justify a reversal of policy. But trends are changing," said Guillermo Arbe, head economist, Peru at Scotiabank, in a note. He said his bank maintains its expectation that the rate will remain at 7.75% through the third quarter before dropping to 7.25% in the fourth quarter and to near 5.25% by the end of 2024. Latin American stocks snapped four straight sessions of gains to fall 0.9%, with miners leading Brazilian equities 0.6% lower as metal prices weakened.
A sell-off in the South African rand gathered pace as a news report about a ship allegedly carrying weapons and ammunition from South Africa to Russia spooked investors already concerned about the economic impact of crippling power cuts.
Key Latin American stock indexes and currencies at 1405 GMT:
Stock indexes Latest Daily % change
MSCI Emerging Markets 975.55 -0.42 MSCI LatAm 2278.97 -0.88 Brazil Bovespa 106856.96 -0.55 Mexico IPC 55431.60 -0.19 Chile IPSA 5600.89 0.56 Argentina MerVal 0.00 0 Colombia COLCAP 1165.66 0.47 Currencies Latest Daily % change
Brazil real 4.9726 -0.50
Mexico peso 17.6749 -0.73 Chile peso 799.7 -1.44
Colombia peso 4591.33 -0.87
Peru sol 3.668 0.22
Argentina peso 228.9500 -0.17
(interbank) Argentina peso 467 0.86
(parallel) (Reporting by Amruta Khandekar; Editing by Kirsten Donovan)
