EMERGING MARKETS-Latam FX bruised by U.S. rate jitters, Brazil’s real leads declines

By Amruta Khandekar and Johann M Cherian

Sept 27 (Reuters) – Most Latin American currencies dropped on Wednesday, with the Brazilian real weakening past 5 per dollar for the first time in over a month as the likelihood of tighter U.S. monetary policy dampened appetite for riskier assets. MSCI’s index for Latin American currencies .MILA00000CUS was down 1.1% by 14:49 GMT, hitting an over two-month low.

The Brazilian real BRL=crossed the 5.00 per dollar level in spot market trading for the first time since Aug. 18. It was last down 0.6% at 5.02 to the dollar.

Latin American currencies have been bruised this week by growing speculation that the Federal Reserve could keep interest rates elevated for longer than expected while on the other hand, countries like Brazil have kickstarted a rate-cutting cycle.

Recent inflation data from Brazil has bolstered expectations that the central bank will stick to 50-basis-point rate cuts for now and refrain from more aggressive monetary policy easing, with Brazil central bank governor Roberto Campos Neto stressing the need to bring inflation under control.

“In Brazil, they’re more already in the mentality of we have to cut into record-high interest rates, otherwise we risk the growth,” said Juan Perez, director of trading at Monex USA.

“Even though their economic numbers are not in any way gloomy, they’re jumping ahead of whenever the Federal Reserve pivot may come.”

Brazilian stocks .BVSP, however, gained 0.4% as shares of state-owned oil firm Petrobras PETR4.SA and other energy stocks gained with oil prices rising by more than $1 amid focus on tight supply O/R.

The Mexican peso MXN= slipped 0.5%, falling for the third straight session, a day before a local monetary policy decision where the central bank is widely expected to hold its benchmark interest rate for the fourth consecutive time.

The Colombian peso COP= tumbled for the fifth straight day, down 0.4%, with markets also awaiting the country’s interest rate verdict later this week.

The Chilean peso CLP= fell 0.2% with the currency of the world’s biggest copper producer hurt by a retreat in prices of the red metal. MET/L

The chairman of Chile’s Codelco that a recovery in output is expected to start next year.

The Peruvian sol PEN= bucked the trend to rise 0.2%.

Elsewhere, the Czech crown EURCZK= was up 0.2% against the euro after the Czech National Bank left its main interest rate unchanged.

The International Monetary Fund did not reach a staff-level agreement with Sri Lanka in its first review under a $2.9 billion bailout package, the Fund said on Wednesday.

Key Latin American stock indexes and currencies at 1449 GMT:

Stock indexes

Latest

Daily % change

MSCI Emerging Markets .MSCIEF

947.97

0.08

MSCI LatAm .MILA00000PUS

2267.64

-0.54

Brazil Bovespa .BVSP

114700.70

0.44

Mexico IPC .MXX

51427.24

0.63

Chile IPSA .SPIPSA

5784.84

0.39

Argentina MerVal .MERV

550688.48

1.369

Colombia COLCAP .COLCAP

1094.32

0.44

Currencies

Latest

Daily % change

Brazil real BRBY

5.0215

-0.69

Mexico peso MXN=D2

17.6240

-0.57

Chile peso CLP=CL

905.2

-0.17

Colombia peso COP=

4087.15

-0.48

Peru sol PEN=PE

3.7914

0.19

Argentina peso (interbank) ARS=RASL

350.0000

0.01

Argentina peso (parallel) ARSB=

773

-1.94

(Reporting by Amruta Khandekar and Johann M Cherian in Bengaluru; Editing by Andrea Ricci)

((Amruta.Khandekar@thomsonreuters.com;))

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