EMERGING MARKETS-Latam Assets Company; Chilean peso up on hawkish c.bank minutes

Band Susan Mathew and Anisha Sircar

April 13 (Reuters) – Most Latin Americans shares and currencies followed broader emerging market peers on Wednesday, with the Chilean peso amount like central bank minutes showed the bank had considered a sharper rise in interest rates at its last meeting.

The peso CLP=firmed 0.2% despite falling prices for Chile’s main export, copper. MET/L

Chile’s central bank has considered raising the benchmark interest rate to 175 basis points at its previous meeting due to persistent inflationary pressures, before settling for a 150 basis point hike to 7%.

The decision left room to expedite if necessary, according to the minutes.

MSCI Latam Stock Index .MILA00000PUS gained 0.3%, and most other Latin currencies were flat or higher, with higher crude prices helping exporter currencies Colombia COP=and Mexico MXN=up 0.8% and 0.2% respectively. OR

“The longer energy prices remain high, the more they will reduce the growth of commodity importers and add to inflationary pressures,” said Skylar Montgomery Koning, senior macro strategist at TS Lombard. “Exporters, who were already well ahead of (monetary policy) tightening, will continue to be.”

HHowever, analysts have raised concerns about the outlook for Latin American equities and currencies this year, as rising inflationary pressures, war in Ukraine and slowing growth threaten the outlook for risky assets.

A rally in regional currencies was rattled earlier this month after hawkish comments from the US Federal Reserve spooked markets, with investors now awaiting the outcome of the European Central Bank’s policy meeting on Thursday.

“There is every reason to fear that monetary tightening by the Fed and the ECB this year, after years of ultra-expansionary monetary policy, could have a negative impact on emerging market assets for some time to come,” he said. said Tatha Ghose, analyst at Commerzbank.

The true of Brazil BRBY weakened, with investors looking at past data that showed the country’s retail sales in February rose 1.1% from January, well above market expectations.

The currency is heading for volatility as Brazil faces presidential elections in October. Former leftist President Luiz Inacio Lula da Silva’s lead in the electoral race has been halved in a month by far-right President Jair Bolsonaro, according to a new poll.

Fitch Solutions lowered Latam’s 2022 growth forecast to 2% from 2.2%, highlighting political risks in the region, adding that high inflation will prompt Latam’s central banks to extend interest rate hike cycles. already aggressive interest.

Elsewhere, S&P Global Ratings on Wednesday lowered Sri Lanka’s foreign exchange rating into junk territory from “CC” to “CCC”, citing the economic crisis in the country and mounting external financing pressures.

Major Latin American Stock Indices and Currencies at 1930GMT:

Stock indices

Latest

% daily change

MSCI Emerging Markets .MSCIEF

1120.60

0.92

MSCI Latam .MILA00000PUS

2637.99

0.3

BrazilBovespa .BVSP

116739.49

0.51

Mexico IPC .MXX

54176.74

0.5

Chile IPSA .SPIPSA

4924.45

0.31

Argentina MerVal .MERV

90972.59

0.694

Colombia COLCAP .COLCAP

1610.15

-0.99

Currencies

Latest

% daily change

Brazilian real BRBY

4.6860

-0.22

mexican peso MXN=D2

19.7613

0.13

chilean peso CLP=CL

804.9

0.19

Colombian peso COP=

3719.01

0.78

Soil of Peru PEN=PE

3.733

-0.21

Argentinian peso (interbank) ARS=RASL

112.9500

-0.16

Argentinian peso (parallel) ARSB=

192

1.56

(Reporting by Susan Mathew and Anisha Sircar in Bengaluru; Editing by Barbara Lewis and Nick Zieminski)

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