Stronger US dollar halts Latin American currencies' recovery
Mexico's inflation accelerates, rate cut unlikely in May
Argentina's central bank bullish on inflation outlook
Alpek shares jump after results
Latin American stocks off 0.2%, currencies slip 0.1%
Updated at 3:30pm ET/1930 GMT
By Bansari Mayur Kamdar
April 24 (Reuters) - Most currenciesin Latin America eased on Wednesday as the dollar regained some ground, with the Mexican peso sliding even as data showing an accelerationin inflation reinforced bets that the central bank will hold interestrates steady.
The peso MXN= slid 0.7% against a stronger dollar, Brazil's real BRBY lost 0.4% and Colombia's peso COP= dropped 1%.
Mexico's consumer prices unexpectedly rose in the first half of April, supporting expectations the country's central bank will hold its benchmark interest rate steady at its next policy meeting.
"In our assessment, the recent FX and rate developments (repricing of the U.S. FOMC fedfunds path and strong U.S. dollar) and today's inflation print do not provide the central bank with enough comfort to cut the policy rate at the May meeting," strategists at Goldman Sachs said ina note.
Last week, Bank of Mexico Deputy Governor Jonathan Heath also said interest rates are likely to remain unchanged for longer than expected by markets.
The U.S. dollar index =USD edged higher after slipping in the previous session, renewing pressure on emerging market currencies which have been roiled in recent weeks as investors bet that the U.S. Federal Reserve will be in little hurry to reduce borrowing costs.
The broader Latin American currencies index .MILA00000CUS dipped 0.1%, snapping three sessions of gains.
MSCI's basket of regional stocks .MILA00000PUS fell 0.2%.
Alfa ALFAA.MX gained 1.7%after the conglomerate posted a first-quarter net profit of 1.02 billion pesos ($62 million), swinging to a profit from the loss of 252 million pesos in the year-earlier period.
Shares of Alfa's petrochemical unitAlpek ALPEKA.MX leapt nearly 6% after it reported results in line with analysts' forecasts. Alfa said it is still trying to improve its financial situation in order to proceed with the spin-off of Alpek.
Argentina's Merval index .MERV shed 3%, extending losses for a second straight day, with investors focused on massive demonstrations to reject President Javier Milei's budget cuts to public universities.
Argentina's central bank is bullish the country's monthly inflation rate will come down faster than analysts expect, but sees more work to be done to replenish foreign currency reserves.
Exchange rate repricing with a stronger dollar will hurt countries that started their rate cuttingcycle earlier, said Gabriel Galipolo, thedirector of Brazil's central bank.
In Colombia, the central bank next week is expected to cut its key interest rate by 50 basis points, aReuters poll showed.
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Key Latin American stock indexes and currencies at 1930 GMT:
Latest | Daily % change | |
MSCI Emerging Markets .MSCIEF | 1033.75 | 1.41 |
MSCI LatAm .MILA00000PUS | 2434.93 | -0.17 |
Brazil Bovespa .BVSP | 124833.85 | -0.25 |
Mexico IPC .MXX | 56670.65 | 0.07 |
Chile IPSA .SPIPSA | 6371.38 | -1.52 |
Argentina MerVal .MERV | 1204944.90 | -3.276 |
Colombia COLCAP .COLCAP | 1345.39 | -0.19 |
Currencies | Latest | Daily % change |
Brazil real BRBY | 5.1460 | -0.35 |
Mexico peso MXN=D2 | 17.0540 | -0.67 |
Chile peso CLP=CL | 949.4 | 0.65 |
Colombia peso COP= | 3938.28 | -1.06 |
Peru sol PEN=PE | 3.7167 | -0.58 |
Argentina peso (interbank) ARS=RASL | 873.0000 | 0.00 |
Argentina peso (parallel) ARSB= | 1015 | 1.48 |
Reporting by Bansari Mayur Kamdar and Lisa Mattackal in Bengaluru; Editing by Andrea Ricci and Paul Simao
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