Mexican peso outperforms on c.bank hike; Latam stocks slide as Wall St wobbles



By Susan Mathew

June 23 (Reuters) - Latin American stocks fell sharply on Thursday as a Wall Street rally lost steam on heightening recession worries, while Mexico's peso rose after the central bank hiked the key interest rate by a record 75 basis points as signaled more.

The Mexican peso MXN= , which was flat just moments before the decision, rose 0.3% to 19.98, as it followed data that showed inflation in the country rose by more than expected in early June.

The peso outperformed Latin American peers, which slid against a stronger dollar as investors fretted over the impact of aggressive monetary policy tightening on growth.

The Mexican decision was the latest in a slew of central banks moves on Thursday.

In a surprising move, Egypt's central bank kept key interest rates unchanged on Thursday at 11.25%, Markets were expecting a hike by 50 bps.

"With inflation set to rise further above the central bank's target range, we still think that the next move in rates will be up," said James Swanston, Middle East and North Africa Economist at Capital Economics.

"We expect a further 150bp of hikes to 12.75%, by the end of the year – although, following today's decision and recent comments, the risk to our forecasts lie to the downside."

Egyptian stocks .EGX30 had closed lower before the decision, while the currency EGP= traded flat through most of the session.

Egypt moved in contrast to other central bank decisions on Thursday which moved as expected: Indonesia stood pat on the interest rate, as did Turkey despite inflation at 73%. Philippines hiked by 25 bps but the peso PHP= still fell 0.5% to over 16-year lows.

Surging inflation has seen most emerging market central banks embark of an aggressive tightening cycle. With energy prices rising and the U.S. interest rates heading higher, the banks may have to extend the cycle.

Brazil's real BRBY BRL= hit four-month lows, despite a raise in the central bank's growth outlook for 2022 to 1.7% from 1%.

As oil prices fell, crude exporter Colombia's peso COP= dropped 2%. A strike at the world's largest copper producer in Chile, saw the country's currency CLP= slip further in to record low territory.

Among stocks, Brazilian and Mexican stocks .BVSP .MXX slid about 1% each, while Colombia's COLCAP index .COLCAP and CHile's IPSA .SPIPSA slumped 2.4% each.

Wall Street struggled for direction with the Down Jones .DJI and S&P 500 .SPX turning to losses at one point, as investors worried about recession.

Key Latin American stock indexes and currencies at 1858 GMT: Stock indexes

Latest

Daily %

change MSCI Emerging Markets

994.72

0.11 .MSCIEF

MSCI LatAm

2026.03

-2.83 .MILA00000PUS

Brazil Bovespa

98159.35

-1.37 .BVSP

Mexico IPC

46766.15

-0.8 .MXX

Chile IPSA

4940.18

-2.3 .SPIPSA

Argentina MerVal

82972.91

-3.14 .MERV

Colombia COLCAP

1338.48

-2.46 .COLCAP

Currencies

Latest

Daily %

change Brazil real

5.2326

-1.07 BRBY

Mexico peso

20.0039

0.20 MXN=D2

Chile peso

905.2

-1.81 CLP=CL

Colombia peso COP=

4096.13

-1.98 Peru sol

3.7549

-1.12 PEN=PE

Argentina peso

124.0800

-0.17 (interbank) ARS=RASL


Reporting by Susan Mathew in Bengaluru; Editing by Nick Zieminski

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