Home Argentina community Latam FX muted, stocks gain as central banks spotlight

Latam FX muted, stocks gain as central banks spotlight

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  • Peruvian soil plunges into discord at Las Bambas mine
  • Central banks of Chile, Mexico and Colombia to meet

December 13 (Reuters) – Latin American currencies were largely unchanged on Monday, following a similar trend in emerging markets as a series of upcoming central bank meetings kept investors wary of risky assets.

But most regional stocks rose as investors viewed stocks as a safer bet against currencies or debt. The MSCI regional equity index (.MILA00000PUS) gained 0.8%.

The MSCI Latin American (Latin) Currency Index (.MILA00000CUS) rose 0.1% at the start of trade, with most regional units moving less than 0.3% in either direction.

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Peruvian sol fell 0.2% as a community blocking a transport route used by MMG Ltd’s copper mine (1208.HK) Las Bambas rejected a revised offer from the company as “a joke” and threatened to boycott subsequent talks. Read more

The blockade, in place since November 20, threatens to halt production from the mine, which represents around 2% of the world’s copper supply. Copper is Peru’s main export.

Chile’s central bank will be the first of its regional counterparts to meet this week, Tuesday, while the Mexican and Colombian central banks are expected to have their respective meetings Thursday and Friday.

All three central banks are expected to raise interest rates sharply and set a hawkish stance for next year as they work to contain rising inflation this year.

Brazil’s central bank raised rates by 150 basis points last week and also signaled another hike of the same magnitude at its next meeting, as Latin America’s largest economy grapples with a strong price increase.

Rate hikes have been the norm in most emerging markets this year, with the exception of a few outliers like Turkey and China.

The focus is also on the last Federal Reserve policy meeting of this year, scheduled for Tuesday and Wednesday, during which the bank is expected to present its plans to gradually cut stimulus and raise interest rates. next year.

Any anticipated rate hikes by the US central bank’s Federal Open Market Committee (FOMC) are likely to reduce demand for high-risk assets, especially in emerging markets.

“By speeding up the reduction process, the FOMC will likely have a free hand to start increasing in the spring,” Rabobank analysts wrote in a note.

“Our projections are that inflation will remain high, albeit declining, for most of next year. Given the current position of (Fed Chairman Jerome) Powell, this will likely lead the FOMC to increase in spring 2022. “

In Argentina, the International Monetary Fund has said so and the government is “fully committed” to working on a new debt program. Read more

Main Latin American stock market indices and currencies:

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Reporting by Ambar Warrick Editing by Paul Simao

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