EMERGING MARKETS-Latam currencies shrug off stronger dollar; Mexican peso buoyed by rate hike

BY Reuters | ECONOMIC | 05/13/22 11:12 AM EDT
       * Latam stocks, FX down ~0.5% this week
    * C. banks in Mexico, Peru, Argentina hike interest rates
    * Brazil antitrust regulator approves sale of Petrobras

    By Anisha Sircar
    May 13 (Reuters) - Most Latin American currencies rose on
Friday even as the dollar hovered at two-decade highs on Friday,
but were set for weekly losses amid a broader risk-off on global
growth fears, while Mexico's peso was buoyed after the central
bank hiked interest rates.
    Mexico's peso gained 0.4% against the dollar,
bouncing off of one-week lows after the Bank of Mexico on
Thursday raised the benchmark interest rate by 50 basis points
to 7.0%, as expected.
    Peru's sol slipped 0.6% even after its own central
bank raised rates by 50 basis points to 5%, the tenth
consecutive hike as the copper-producing Andean nation battles
spiraling inflation.
    Argentina's central bank, too, announced a hike in the
benchmark interest rate by 200 basis points to 49% after data
earlier in the day showed inflation in the 12 months through
April was running at 58%.
    "Inflation has risen to levels dangerous, and the only way
in theory to combat that is raising rates, but central bank
action isn't determining the value of foreign currency
currently... We need global factors to come together for a more
positive Latam outlook, as everything is so downwardly revised,"
said Juan Perez, director of trading at Monex USA.
    MSCI's index of Latam currencies eyed their
fourth straight week in the red after the greenback saw a boost
in late April on U.S. rate hike expectations. Chile's peso
 and Colombia's peso hovered near pandemic lows.
    "We're back to the levels of market fear and chaos as in the
beginning of the pandemic in 2020 - 2022 is another moment of
shock," Perez added, citing risks around China, rising U.S.
interest rates, slowing growth and the war in Ukraine.
    Stocks were headed for a 0.6% weekly decline as
investors were driven away from riskier assets amid broader
recessionary fears, and were tracking their sixth straight week
in the red.
    However, headlines pointing to smoother commercial trade,
new trade patterns with Latin American countries or a resolution
in the Russia-Ukraine war could lift stocks in the weeks to
come, analysts say.
    Brazil's real, Chile's peso and Colombia's
peso were set for their fourth straight weeks in the red,
skidding between 0.1% and 1.2% on the week.
    Petrobras shares jumped 1.6%, boosting Brazil's
benchmark Bovespa. Brazil's antitrust watchdog CADE said
the sale of the state-run oil company's Reman refinery to fuel
distributor Atem was approved with no restrictions.

    Key Latin American stock indexes and currencies at 1500 GMT:

   Stock indexes            Latest    Daily % change
 MSCI Emerging Markets       1005.02             1.74

 MSCI LatAm                  2252.26             1.94

 Brazil Bovespa            107449.53             1.67

 Mexico IPC                 49669.02             0.73

 Chile IPSA                  4826.81             2.38

 Argentina MerVal           87621.05            2.456

 Colombia COLCAP             1530.63             1.65

      Currencies            Latest    Daily % change
 Brazil real                  5.0920             0.97

 Mexico peso                 20.1764             0.33

 Chile peso                    860.1             0.52

 Colombia peso               4110.16            -0.18

 Peru sol                       3.75             0.27

 Argentina peso             117.3900            -0.11

 Argentina peso                199.5             2.01

 (Reporting by Anisha Sircar in Bengaluru)

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