Latam currencies slip with Banxico minutes, Peru rate decision in focus
Peru's central bank expected to leave interest rates unchanged
Brazil's retail sales unexpectedly rise to record high in May
Latam stocks up 0.3%, FX off 0.3%
Updated at 03:30 p.m. ET/ 1930 GMT
By Johann M Cherian and Shristi Achar A
July 11 (Reuters) - A gauge of Latin American currencies fell against the dollar on Thursday, with investorscautious ahead of an interest rate decision in Peru and assessed Banxico's monetary policy minutes.
MSCI's index tracking regional currencies .MILA00000CUS slipped 0.3% against a weakening dollar, after data showed that headline U.S. consumer prices unexpectedly fell in June.
However, the dollar's slip saw the Japanese yen JPY=EBS jump nearly 3%, its biggest daily surge since late 2022, raising questions about official buying of the Asian currency.
Back in resources-rich Latin America, Brazil's real BRL= fell nearly0.6%, with traders assessing retail sales data that showed an unexpected rise to record highs, a day after data signaled moderating price pressures for consumers.
Markets also assessed the implications of a tax overhaul that the country's lower house approved, which aims to boost productivity by streamlining a tax system critics blame for burdening businesses with excessive costs.
"It is a good thing because in the past ... it was a web of taxes and it was so complicated that it discouraged a lot of economic activity," said Eduardo Ordonez Bueso, an emerging markets debt portfolio manager at BankInvest.
Separately, the country's Senate Committee postponed voting on a constitutional amendment proposal granting the central bank greater financial autonomy from the executive.
Concerns around Brazil's fiscal standing along with central bank independence have been among top reasons for the real trading near two-year lows following a recent plunge in value.
The Mexican peso .MXN= edged 0.3% up.Minutes from the local central bank's June monetary policy meeting showed the five-member governing board foresaw that the inflationary environment may allow for discussing further rate cuts at upcoming meetings.
Chile's peso CLP= and Peru's sol PEN= gained 0.1%and 0.6%respectively, with the currencies of both copper exporting countries hovering near one-month highs.
Focus was on an interest rate decision by the Peruvian central bank later in the day, where economists polled by Reuters see borrowing costs being held at 5.75%.
"The (Monetary Policy Committee) has likely entered the fine-tuning stage of the cutting cycle. Accordingly, we view the MPC as favoring a cautious wait-and-see approach to cutting that endows it with greater policy flexibility," strategists at Goldman Sachs said in a note.
MSCI's index tracking regional equity indexes .MILA00000PUS climbed nearly 0.3%,with heavyweight Brazil'sBovespa .BVSP adding 0.8%, helped by a 2% rise inTelefonica Brasil VIVT3.SA on a Morgan Stanley upgrade.
Bourses in Mexico .MXX, Chile .SPIPSA and Argentina .MERV rose between 0.3%and 0.9%.
Meanwhile, theInternational Monetary Fund said Argentina's preliminary data show the program's fiscal and reserves targets continue to be met.
Key Latin American stock indexes and currencies:
Latin American market prices from Reuters | ||
Stock indexes | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1125.92 | 1.32 |
MSCI LatAm .MILA00000PUS | 2308.18 | 0.28 |
Brazil Bovespa .BVSP | 128237.62 | 0.8 |
Mexico IPC .MXX | 54460.33 | 0.33 |
Chile IPSA .SPIPSA | 6526.91 | 0.92 |
Argentina MerVal .MERV | 1703600.39 | 0.804 |
Colombia COLCAP .COLCAP | 1370.57 | 0.34 |
Currencies | Latest | Daily % change |
Brazil real BRBY | 5.4438 | -0.58 |
Mexico peso MXN=D2 | 17.7623 | 0.30 |
Chile peso CLP=CL | 914.2 | 0.12 |
Colombia peso COP= | 3977.5 | -0.31 |
Peru sol PEN=PE | 3.7459 | 0.65 |
Argentina peso (interbank) ARS=RASL | 919.0000 | 0.00 |
Argentina peso (parallel) ARSB= | 1445 | 0.35 |
Reporting by Johann M Cherian and Shristi Achar A in Bengaluru; Editing by Mark Potter, Alexandra Hudson and Diane Craft
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