Peru's sol hits one-month high after central bank keeps rates steady
IMF says emerging market capital inflows recover to 2018 levels
Fiscal expansion not good for Brazil at the moment, Haddad says
Argentine inflation data up 4.6% m-o-m in June
Latam stocks up 0.9%, FX up 0.3%
Updated at 3:45 p.m. EDT/ 1945 GMT
By Johann M Cherian
July 12 (Reuters) -Most Latin American currencies strengthened on Friday,with Peru's sol hitting its highest level in a month after the central bank left borrowing costs unchanged, while regional stocks were set for their biggest weekly jump in seven months.
MSCI's index tracking regional currencies .MILA00000CUS gained 0.3% against the dollar, with investors firming bets of a U.S. Federal Reserve rate cut in September.
The fall in the dollar also saw the Japanese yen JPY=EBS hit an almost four-week high, raising speculation of authorities' intervention for a second day.
Peru's central bank held its benchmark interest rate steady at 5.75% on Thursday for the second policy meeting in a row, as expected, after annual inflation rose slightly to 2.29% last month. The sol PEN= appreciated 0.9% on Friday.
"Inflation will remain within the target range and, together with the incipient recovery of economic activity, (it) will give the central bank room to implement additional cuts to the policy rate in the coming months, although with some extra pauses," said Hugo Vega, senior economist at BBVA Research said.
Brazil's real BRL= edged 0.2% up as investors assessed remarks by Finance Minister Fernando Haddad, who underlined that fiscal expansion was not a good thing for the country.
Investor sentiment was rattled late last month, sending the real down to over two-year lows, on concerns around high fiscal deficits and central bank independence in the region's biggest economy.
Meanwhile, the International Monetary Fund said that gross capital inflows into emerging markets excluding China last year rose to $110 billion or 0.6% of their economic output, the highest level since 2018.
Oil exporters Mexico's peso MXN= and Colombia's peso COP= firmed 0.8% and 1.3%, respectively.
The Mexican currency is set for its second straight week of gains, up over 1.5%, supported by the highest interest rate for any of the more popularly traded free-floating currencies, offering better returns than the dollar.
The Argentine peso ARSB= weakened 1% to 1,480 per dollar in the parallel black market. Data showed Argentine inflation rate stood at 4.6% in June, speeding up from May's rate of 4.2% and breaking a five-month streak of slowdown.
The world's largest copper producer Chile's peso CLP= jumped nearly 1%, and was poised for its biggest weekly gain of 2.5% in two months as prices of the metal ticked higher. MET/L
On the equities side, MSCI's index tracking regional bourses .MILA00000PUS advanced 0.9%, with Brazil's Bovespa .BVSP adding 0.5%.
The MSCI equities index is up 3.6% for the week and is on track for its biggest weekly jump in over eight months.
Key Latin American stock indexes and currencies at 1437 GMT:
Latin American market prices from Reuters | ||
Stock indexes | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1124.73 | -0.01 |
MSCI LatAm .MILA00000PUS | 2333.83 | 0.9 |
Brazil Bovespa .BVSP | 128941.60 | 0.51 |
Mexico IPC .MXX | 54913.79 | 0.9 |
Chile IPSA .SPIPSA | 6546.63 | 0.03 |
Argentina MerVal .MERV | 1715182.70 | 0.557 |
Colombia COLCAP .COLCAP | 1370.30 | -0.44 |
Currencies | Latest | Daily % change |
Brazil real BRBY | 5.4307 | 0.20 |
Mexico peso MXN=D2 | 17.6268 | 0.79 |
Chile peso CLP=CL | 905.4 | 0.97 |
Colombia peso COP= | 3925.24 | 1.26 |
Peru sol PEN=PE | 3.7129 | 0.89 |
Argentina peso (interbank) ARS=RASL | 919.0000 | 0.05 |
Argentina peso (parallel) ARSB= | 1480 | -1.01 |
Reporting by Johann M Cherian and Shristi Achar A in Bengaluru; Editing by Susan Fenton and Josie Kao
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