* Mexico c.bank raises interest rate to 10.50% as expected * Argentina’s economy grew 5.9% during the third quarter * Brazil’s Guedes predicts monetary easing by mid 2023, GDP up 3% * Economic growth in Latam, Caribbean seen slowing in 2023 – ECLAC (Updates prices, details; adds comment) By Susan Mathew and Bansari Mayur Kamdar Dec 15 (Reuters) – Latin American currencies fell on Thursday as hawkish rhetoric from major central banks dented risk appetite and boosted the dollar, with Mexico’s peso sliding 0.5% after its central bank followed U.S. and European peers in raising rates by 50 basis points. The Bank of Mexico raised its key interest rate to a record 10.50%, tempering its monetary tightening pace amid a slowdown in inflation while suggesting it could hike rates at least one more time. Earlier in the day, the European Central Bank and the Bank of England lifted interest rates, as expected, and flagged more hikes to come as they battle high inflation, a day after the Federal Reserve raised its policy rate by half a percentage point, fuelling fears of a global recession. Fiscal worries weighed on Brazil’s real, which fell 0.7%, after outgoing President Jair Bolsonaro signed an executive decree to once again breach the constitutional spending cap to be able to pay for social security expenses. Meanwhile, incoming Finance Minister Fernando Haddad on Wednesday said fiscal expansion would not at this time help Brazil’s economy, the largest in Latin America. Haddad’s quotes suggest a more explicit attempt to transmit a message of fiscal responsibility to investors after domestic assets performed poorly in recent days, Citigroup strategists said. Brazil’s central bank remains vigilant in assessing fiscal policy changes and their impact on markets, said the bank’s chief Roberto Campos Neto, noting that what matters is how this will affect the inflation expectations channel. Paulo Guedes, economy minister of Brazil, projected interest rates would start to fall by mid-2023 and the economy would expand by 3% again. Peru’s sol slipped 0.5% amid a nationwide state of emergency declared on Wednesday, after a week of fiery protests left at least eight people dead. The unrest was sparked by the Dec. 7 ousting of former President Pedro Castillo. Brazil’s Bovespa was the only Latam bourse in green, up 0.3% as shares of state oil firm Petrobras recovered after tumbling nearly 8% on Wednesday spooked by the lower house of Congress’s vote to make it easier for politicians to take roles at state-run firms. Moody’s rating agency on Wednesday said Brazil’s proposed changes to the country’s State-Owned Enterprise Law are negative for public banks because they may raise governance risks for such institutions. In line with the risk-off sentiment that saw U.S. stocks sell off, the main stocks indexes of Chile and Colombia slumped 1.4% and 0.9%, respectively. The expansion of economies in Latin America and the Caribbean is seen cooling next year, the United Nations economic commission for the region (ECLAC) said, with both internal and external challenges weighing on growth. Data showed Argentina’s economy expanded 5.9% in the third quarter of the year compared to the same period last year, in spite of sky-high inflation and a weakening local currency. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 958.20 -1.59 MSCI LatAm 2057.31 -0.29 Brazil Bovespa 104092.70 0.33 Mexico IPC 49676.63 -0.74 Chile IPSA 5131.80 -1.43 Argentina MerVal 164167.50 -0.03 Colombia COLCAP 1217.83 -1.02 Currencies Latest Daily % change Brazil real 5.3195 -0.21 Mexico peso 19.7244 -0.61 Chile peso 876.9 -0.80 Colombia peso 4789.17 -0.23 Peru sol 3.8321 -0.65 Argentina peso (interbank) 172.3900 -0.19 Argentina peso (parallel) 316 1.27 (Reporting by Susan Mathew and Bansari Mayur Kamdar in Bengaluru; Editing by Paul Simao, William Maclean)
Source: news.google.com
