Mexican peso slips as markets digest Banxico's dovish tilt
Brazil lifts 2025 inflation projections to 4%
Brazil's Suzano up on dropping plan to buy International Paper
Bank of Mexico holds key interest rate at 11%
Rand drops on reported discord over cabinet posts
FX off 0.4%, stocks up 0.1%
Updated at 03:55 p.m. ET/ 1955 GMT
By Johann M Cherian and Shristi Achar A
June 27 (Reuters) - Most Latin American currencies slipped on Thursday, with the Mexican peso falling for the third session, after its central bank left the key interest rate unchanged but acknowledged progress on the inflation front.
Mexico's peso MXN= lost 0.4% as theBank of Mexico (Banxico) held its benchmark interest rate steady at 11.00% in a split decision, and said it expects the country's disinflation process to continue.
"They're essentially not placing too much weight on the potential for inflationary pressures as a result of the weakening of the Mexican peso post-election," said Christian Lawrence, senior market strategist, LatAm FX at Rabobank.
"That is interesting because it certainly tilts the balance towards rate cuts definitely still coming this year."
Investors also digested the fourcabinet appointments in President-elect Claudia Sheinbaum's government, including a pair of former Mexico City officials to be her ministers for energy and transportation.
The peso had depreciated significantly and is down over 7% year-to-date following her landslide win earlier in the month.
MSCI's index tracking Latam currencies .MILA00000CUS slipped 0.4%, with Brazil's real BRL= edging up 0.2%, hovering nearlevels last seen in January 2022 it hit in the previous session.
Brazil's local central bank upped its 2025 inflation forecasts to 4%, citing stronger-than-expected activity which led it to halt interest rate cuts earlier this month. The regulator has a continuous inflation target of 3%.
Separately, Brazilian central bank chiefRoberto Campos Neto said that a rate hike is not the bank's baseline scenario, and policymakers have intentionally chosen not to provide any guidance at this time.
Currency of copper producers, Chile CLP= and Peru PEN= weakenedas prices of the red-metal hit their weakest in more than two months. MET/L
On the equities front, MSCI's index tracking Latin American stocks .MILA00000CUS edged 0.1% higher.
Brazil's heavyweight Bovespaindex .BVSP climbed 1.2%, with Suzano SUZB3.SA jumping nearly 13% after the pulpmaker said it has terminated talks to buy International Paper IP.N.
Petrobras PETR4.SA climbed 1.9% after brokerage Bank of America upgraded the oil firm to "buy".
Equatorial EQTL3.SA advanced 6.3% after the power company was the only bidder for holding a 15% stake in water utility Sabesp SBSP3.SA, which is currently under a privatization process.
Elsewhere, Bolivia's boliviano BOB= edged up 0.1% in thin trades after an attempted coup was thwarted.
South Africa's rand ZAR= depreciated over 1% on reports of major disagreements over cabinet posts.
Kenya's shilling KES= slipped as civil unrest continued even after the president bowed to pressure to withdraw a tax hike bill.
Key Latin American stock indexes and currencies:
Latest | Daily % change | |
MSCI Emerging Markets .MSCIEF | 1081.92 | -0.39 |
MSCI LatAm .MILA00000PUS | 2183.84 | 0.09 |
Brazil Bovespa .BVSP | 124110.58 | 1.2 |
Mexico IPC .MXX | 52197.06 | -0.52 |
Chile IPSA .SPIPSA | 6492.32 | -0.31 |
Argentina MerVal .MERV | 1627853.66 | 3.39 |
Colombia COLCAP .COLCAP | 1377.35 | 0.62 |
Currencies | Latest | Daily % change |
Brazil real BRBY | 5.5049 | 0.24 |
Mexico peso MXN=D2 | 18.4058 | -0.44 |
Chile peso CLP=CL | 954.9 | -0.44 |
Colombia peso COP= | 4170.5 | -0.62 |
Peru sol PEN=PE | 3.8199 | -0.04 |
Argentina peso (interbank) ARS=RASL | 910.5000 | 0.16 |
Reporting by Johann M Cherian in Bengaluru; Editing by Alistair Bell and Diane Craft
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