Foreign Currency

Dollar recovery roils Latin American currencies


EMERGING MARKETS-Dollar recovery roils Latin American currencies

Mexico’s inflation accelerates, rate cut unlikely in May

Argentina cenbank: bullish on inflation, more work needed on FX reserves

Latam stocks off 0.5%, FX slips 0.3%

By Bansari Mayur Kamdar

April 24 (Reuters)Currencies in Latin America eased on Wednesday as the dollar regained some ground, with the Mexican peso sliding even as data showing acceleration in inflation reinforced bets that the central bank will hold interest rates.

The peso MXN= slid 0.7% against a strengthening dollar, while the broader Latin American currencies index .MILA00000CUS slipped 0.3%.

Mexico’s consumer prices unexpectedly rose in the first half of April, supporting expectations that the country’s central bank will hold its benchmark interest rate steady at its next policy meeting.

“In our assessment, the recent FX and rate developments (repricing of the US FOMC fed funds path and strong U.S. dollar) and today’s inflation print do not provide the central bank with enough comfort to cut the policy rate at the May meeting,” said strategists at Goldman Sachs in a note.

Last week, Bank of Mexico Deputy Governor Jonathan Heath also said the interest rate is likely to remain unchanged for longer than expected by markets.

Mexican stocks .MXX slipped 0.4%. Capping losses, Alfa ALFAA.MX gained 1.1% after the conglomerate posted a first-quarter net profit of 1.02 billion pesos ($62 million), swinging to profit from the loss of 252 million pesos it posted a year earlier, citing a strong performance by its food unit.

Argentina’s central bank is bullish that the country’s monthly inflation rate will come down faster than analysts expect, a bank presentation showed, but sees more work to be done replenishing foreign currency reserve levels.

The Argentinian Merval index .MERV shed 1.6%, extending losses for a second straight day, with investors focused on massive demonstrations to reject President Javier Milei’s budget cuts to public universities.

Chile’s peso CLP= and Peru’s sol PEN= bucked the weakness in the region, up 0.2% each as strong copper prices boosted the currencies of the top producers of the metal.

Brazil’s real BRL= and Colombia’s peso COP= shed 0.8% and 1.0%, respectively, against the dollar.

Exchange rate repricing with a stronger dollar will hurt countries that started their cutting cycle earlier, Brazil’s central bank director Gabriel Galipolo said.

In Colombia, the central bank next week is expected to cut its key interest rate by 50 basis points, to support the country’s economic recovery without losing control of inflation, a Reuters poll showed.

Elsewhere in emerging markets, the Indonesian rupiah IDR= rose 0.4% against the dollar after Bank Indonesia’s surprise 25 bps hike, in efforts to support the currency which has fallen to four-year lows on growing risk aversion and a delay in the expected timing of any U.S. policy easing.

Most stock markets in the Gulf ended lower as Israel intensified strikes across Gaza and the army ordered fresh evacuations in the north of the enclave.

Key Latin American stock indexes and currencies at 1448 GMT:

Stock indexes

Latest

Daily % change

MSCI Emerging Markets .MSCIEF

1033.39

1.38

MSCI LatAm .MILA00000PUS

2427.22

-0.49

Brazil Bovespa .BVSP

125103.50

-0.04

Mexico IPC .MXX

56391.21

-0.43

Chile IPSA .SPIPSA

6430.98

-0.6

Argentina MerVal .MERV

1226546.22

-1.542

Colombia COLCAP .COLCAP

1346.58

-0.1

Currencies

Latest

Daily % change

Brazil real BRBY

5.1646

-0.71

Mexico peso MXN=D2

17.0873

-0.87

Chile peso CLP=CL

953.7

0.20

Colombia peso COP=

3937.54

-1.04

Peru sol PEN=PE

3.6903

0.14

Argentina peso (interbank) ARS=RASL

873.0000

0.00

Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Andrea Ricci



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