Peru's sol weakens among Latam FX ahead of interest rate decision
Argentina inflation cools in September
Peru interest rate decision on tap
Latam MSCI stocks index up 0.5%, FX slips 0.1%
Updated at 1931 GMT
By Johann M Cherian
Oct 10 (Reuters) -Peru's sol depreciated the most among Latin American currencies on Thursday, with traders pricing in an interest rate cut by the domestic central bank, while Colombia's peso firmed, tracking higher crude prices.
Peru's sol PEN= dropped 1.3% and was on track to log its biggest one-day decline since April. Traders are expecting the local central bank to trim borrowing costs in the Andean nation by 25 basis points to 5% later in the day.
On the flip side, the local equities index .SPBLPGPT rose more than 2%.
"Recent data are broadly supportive of further normalization of the policy stance through a moderate move ... the inflation backdrop showed incremental progress even relative to the benign dynamics in recent months and inflation expectations continue to soften, approaching the 2.0% target," said analysts at Goldman Sachs.
Meanwhile, oil exporter Colombia's peso COP= appreciated 0.8% to 4,199 to the dollar, tracking crude prices that jumped over 3.5%, underpinned by a spike in fuel demand as a major storm barreled in to Florida, and supply risks in the Middle East. O/R
More broadly, an index tracking currencies in the region .MILA00000CUS dipped 0.2% against a steady dollar. Markets priced in upcoming interest rate cuts by the U.S. Federal Reserve after data showed U.S. inflation was largely on a downward trend, even though prices ticked up more-than-expected in September.
Mexico's peso MXN= was flat, while the local equity index gained more than 1%, after minutes from Bankxico's September meeting showed the central bank expects easing inflation could allow further reductions to its benchmark interest rate.
Brazil's real BRL= edged up 0.2% after hitting levels seen two weeks ago in the previous session. Finance Minister Fernando Haddad said taxing millionaires is one of the ways by which the government is planning to undertake an income tax reform.
Concerns around fiscal stability in the region's largest economy have weighed on the real recently.
Chile's peso CLP= firmed 0.4% after hitting a one-month low in the previous session, tracking a rebound in copper prices. MET/L
Currencies of major economies in the region have hit a rough patch this week, and are on track for weekly declines as the initial optimism around China's stimulus and the consequent demand for commodities out of the resources-rich region fizzled out.
MSCI's gauge for equities in the region .MILA00000PUS edged up 0.5% but was near one-month lows, with stocks in Brazil .BVSP and Colombia .COLCAP adding 0.2% and 0.7%, respectively.
Elsewhere, Argentina's MerVal index .MERV rose more than 1.3% as data showed inflation stood at 3.5% in September on a monthly basis, in line with a Reuters poll forecast and down from 4.2% in August.
Key Latin American stock indexes and currencies:
Latin American market prices from Reuters | ||
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1156.36 | 0.7 |
MSCI LatAm .MILA00000PUS | 2194.8 | 0.53 |
Brazil Bovespa .BVSP | 130275.01 | 0.24 |
Mexico IPC .MXX | 52367.99 | 0.96 |
Chile IPSA .SPIPSA | 6578.77 | 0.57 |
Argentina Merval .MERV | 1795701.47 | 1.341 |
Colombia COLCAP .COLCAP | 1310.98 | 0.74 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.5844 | 0.17 |
Mexico peso MXN= | 19.4887 | 0.01 |
Chile peso CLP= | 929.1 | 0.36 |
Colombia peso COP= | 4199.85 | 0.84 |
Peru sol PEN= | 3.769 | -1.32 |
Argentina peso (interbank) ARS=RASL | 974.5 | 0.05 |
Argentina peso (parallel) ARSB= | 1160 | 1.29 |
Reporting by Johann M Cherian in Bengaluru; Editing by Philippa Fletcher and Matthew Lewis
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