EMERGING MARKETS-Latam currencies fall sharply as U.S. jobs report boosts dollar

BY Reuters | ECONOMIC | 02/03/23 10:39 AM EST

      Dollar gains after strong U.S. jobs gain

      Brazil's industrial production drops in 2022

      Chile copper production falls in December

      Latam FX off 2%, stocks down 1.9%

    By Amruta Khandekar
       Feb 3 (Reuters) - Latin American currencies fell sharply
on Friday as the dollar strengthened after data showed U.S.
employers added significantly more jobs than expected last
month, while emerging market stocks were set for their first
weekly fall in 2023.
    MSCI's index for Latin American currencies
was down 2% at 1500 GMT after having touched multi-year highs in
the previous session, compared to a 0.9% decline in broader
emerging market currencies.
    The U.S. Labor Department's highly-anticipated monthly
employment report showed nonfarm payrolls surged by 517,000 jobs
in January. Economists in a Reuters poll had forecast a gain of
    The data, which came on the heels of largely dovish messages
from the Federal Reserve and some other central banks earlier
this week, spurred concerns about interest rates staying
elevated for longer than expected, boosting the dollar.
    "It's definitely questioned the need for the Fed to ease
policy later in the year, so that understandably has weighed on
emerging market currencies," said Chris Turner, global head of
markets at ING.
    "I think a modest correction in emerging market currencies
is understandable. I don't think we need to see a really sharp
sell-off (going forward), not unless U.S. price pressures pick
    Most Latin American currencies were at session lows. The
Brazilian real was down 1.9% against the dollar.
    Brazilian President Luiz Inacio Lula da Silva issued his
latest threat to the autonomy of the country's central bank on
Thursday, a day after it floated the possibility of keeping
interest rates at a six-year high for longer than expected.
    Industrial production in Brazil fell 0.7% in 2022,
government statistics agency IBGE said on Friday.
    The currencies of Mexico and Colombia, both
oil exporters, dropped 1.4% and 1.9%, respectively, despite an
uptick in crude prices..
    Chile's peso fell 1.4% as data showed total copper
production in the country, the world's largest producer of the
metal, slumped 0.5% to 495,800 tonnes in December. In Peru, the
world's second-largest copper producer, the sol currency
was down 0.8%.
    Meanwhile, EM stocks fell 0.8% and were on track
for a weekly loss of 1.4%, bogged down by declines in Chinese
equities amid concerns about the country's economic recovery.
Latam stocks dropped 1.9%.
    In India, both houses of the country's parliament were
adjourned on Friday amid chaotic scenes as some lawmakers
demanded an inquiry following the meltdown of shares in
billionaire Gautam Adani's companies.
    S&P Global Ratings revised its outlook on Adani Ports and
Special Economic Zone and Adani Electricity to
negative from stable, saying there was a risk investor concerns
about the companies' governance and disclosures were larger than
currently thought.
    Key Latin American stock indexes and currencies at 1500 GMT:
   Stock indexes            Latest    Daily % change
 MSCI Emerging Markets       1036.98            -0.82

 MSCI LatAm                  2272.30            -1.89

 Brazil Bovespa            110294.57             0.14

 Mexico IPC                 54087.30             0.39

 Chile IPSA                  5303.31            -0.19

 Argentina MerVal          248394.41           -0.185

 Colombia COLCAP             1259.55            -0.04

       Currencies           Latest    Daily % change
 Brazil real                  5.1157            -1.39

 Mexico peso                 18.9149            -1.43

 Chile peso                    789.1            -1.36

 Colombia peso                4673.8            -1.88
 Peru sol                     3.8496            -0.75

 Argentina peso             187.9400            -0.19

 Argentina peso                  374             1.07

 (Reporting by Amruta Khandekar in Bengaluru; Editing by Paul

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