Currencies

Oil price gains help Latam currencies edge higher ahead of crucial Fed meeting

EMERGING MARKETS-Oil price gains help Latam currencies edge higher ahead of crucial Fed meeting

Mexico economy slows sharply in Q4

IMF cuts 2024 Argentina GDP growth forecast

Central bank decisions from Brazil, Chile, Colombia on Wednesday

Hungary holds off on larger rate cuts

Latam FX up 0.2%, stocks off 0.2%

Updated at 3pm ET/2000 GMT

By Amruta Khandekar and Lisa Pauline Mattackal

Jan 30 (Reuters)Latin American currencies turned higher against the dollaron Tuesday, boosted by fresh gains in oil prices as focus turned tothe Federal Reserve’s rate verdict.

Oil prices rose, shaking off worries about demand from China after higher global economic growth forecasts from the International Monetary Fund and as escalating tensions in the Middle East increased supply concerns.

That boosted the currencies of Mexico MXN=D2, Colombia COP= and Brazil BRL=, Latin America’s top oil exporters, which rose between 0.1% and 0.5% against the dollar.

Mexico’s peso MXN= shook off early losses after datashowed gross domestic product (GDP) in Latam’s second-largesteconomy expanded 0.1% quarter-on-quarter in the last three months of 2023, less thanmarket forecasts.

“At the margin, the data increase the chances that Banxico decides to embark on an easing cycle at next week’s Board meeting,” said Jason Tuvey, deputy chief emerging markets economist at Capital Economics, adding that growth in Mexico is expected to stay sluggish in the coming quarters.

Assets of resources-rich Latam have had a lacklustre start to the week as investors shied away from taking on risk as concerns increase over the impact of China’s ailing property sector on its growth prospects.

Focus now also turns to the U.S. Federal Reserve’s rate decision and commentary due on Wednesday, which is likely to provide cues on the timing for U.S. rate cuts.

Rate decisions are also due from the central banks of Brazil, Chile and Colombia on Wednesday.

MSCI’s index of Latin American currencies .MILA00000CUS gained 0.2%.

However,regional stocks .MILA00000PUS struggled, with MSCI’s index slipping 0.2%,extending losses to a second day.

Brazil’s Bovespa.BVSP dipped 0.8% on a drag from financial and utility stocks. O/R

Mexican stocks .MXX rose 0.5%, while Argentina’s MerVal index .MERV gained 1%.

Chile’s peso CLP= and Peru’ssol PEN=PE were flat against the dollar, and the Lima Stock Exchange .SPBLPSPT slipped 0.8%.

The International Monetary Fund slashed its 2024 economic growth projection for Argentina, and adopted a more cautious view on output growth in Latin America as a whole.

The fund will allow Argentina to defer the last review of its $44 billion loan by two months, according to people with direct knowledge.

JPMorgan has delayed a key decision on whether to lift the weighting of Venezuela’s bonds in its EMBI index series by a month.

Elsewhere in emerging markets, Ghana is aiming for a simple debt restructuring to exchange old bonds for new notes as the country seeks relief on some $13 billion owed to international private creditors, sources said.

Key Latin American stock indexes and currencies at 2000 GMT:

Latest

Daily % change

MSCI Emerging Markets .MSCIEF

981.01

-0.93

MSCI LatAm .MILA00000PUS

2535.07

-0.19

Brazil Bovespa .BVSP

127526.94

-0.76

Mexico IPC .MXX

57452.93

0.48

Chile IPSA .SPIPSA

5970.63

-1.55

Argentina MerVal .MERV

1266833.69

1.055

Colombia COLCAP .COLCAP

1278.90

-0.07

Currencies

Latest

Daily % change

Brazil real BRBY

4.9457

-0.04

Mexico peso MXN=D2

17.1490

0.40

Chile peso CLP=CL

929.9

-0.04

Colombia peso COP=

3907.5

0.51

Peru sol PEN=PE

3.7962

0.06

Argentina peso (interbank) ARS=RASL

825.7000

-0.05

Argentina peso (parallel) ARSB=

1195

2.51

Reporting by Amruta Khandekar; Editing by Jane Merriman and Andrea Ricci

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