Brazilian markets climb after central bank halts easing cycle
June 20 (Reuters) -The Brazilian real rose on Thursday and domestic stocks rallied after the central bank halted a rate-cutting cycle in a unanimous decision, offering relief to investors worried about divergent views among policymakers.
The real BRBY, among the worst performing emerging market currencies this year, rose to 5.4134 per dollar, having touched a more than five-month low in the prior session.
The bank's rate-setting committee, known as Copom, held the Selic benchmark interest rate at 10.50% on Wednesday, raised its inflation projections and introduced an alternative scenario with steady rates next year.
"Looking forward, Copom's updated inflation forecasts put our more hawkish monetary policy call of a Selic rate stable at 10.50% until end-2025 in an even more comfortable position (consensus at 9.50%)," Citi economist Leonardo Porto noted.
The committee's united front was a sharp contrast with May's split decision, when directors tapped by the current government dissented from slowing the pace of rate cuts, rattling markets with questions about the monetary policy outlook.
Brazil's main Bovespa stock index .BVSP rose 0.9% to touch a one-week high, with state-owned oil company Petrobras PETR4.SA up 2.5% as crude prices climbed. O/R
Mexico's peso MNX=D3 and stock markets .MXX were under pressure as investors awaited President-elect Claudia Sheinbaum's announcement of her cabinet members.
Markets in Argentina and Chile were closed for public holidays.
Key Latin American stock indexes and currencies:
Latest | Daily % change | |
MSCI Emerging Markets .MSCIEF | 1095.17 | -0.01 |
MSCI LatAm .MILA00000PUS | 2196.43 | 1.13 |
Brazil Bovespa .BVSP | 121362.40 | 0.92 |
Mexico IPC .MXX | 53078.57 | -0.46 |
Chile IPSA .SPIPSA | - | - |
Argentina MerVal .MERV | - | - |
Colombia COLCAP .COLCAP | 1381.89 | 0.1 |
Currencies | Latest | Daily % change |
Brazil real BRBY | 5.4134 | 0.50 |
Mexico peso MXN=D2 | 18.3915 | 0.09 |
Chile peso CLP=CL | - | - |
Colombia peso COP= | 4189.4 | -0.67 |
Peru sol PEN=PE | 3.8158 | -0.21 |
Argentina peso (interbank) ARS=RASL | - | - |
Reporting by Sruthi Shankar in Bengaluru
Editing by Alistair Bell
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