EMERGING MARKETS-Latam currencies track broader EM market higher as U.S. yields retreat
* Ukraine cenbank hikes by 100 bps to 10% * JPM sees Turkey cenbank staying on hold, GS sees hikes * Brazil’s real jumps 1% as iron ore cheers China policy easing By Susan Mathew Jan 20 (Reuters) – Most Latin American currencies firmed on Thursday, in line with broader emerging market peers as U.S. Treasury yields paused after a surge, while currencies of Russia and Ukraine bucked the trend on heightened worries over a possible military conflict. Thursday also saw central bank decisions from several emerging economies: China eased its policy further to spur economic growth, Indonesia, Malaysia and Turkey held their key rates steady, while Sri Lanka and Ukraine hiked. The latest was Ukraine, raising rates by 100 basis points to 10% to tackle persistently high inflation and the economic fallout from a standoff with Russia. Ukraine and Russian dollar bonds slipped as U.S. President Joe Biden predicted a move into Ukraine by Moscow and as the European Union and the United States readied sanctions to be imposed on Russia in case of an invasion. The Russian rouble fell to 76.6 a dollar while Ukraine’s hryvnia lost 0.1%. U.S. economists were split on what Turkey’s central bank would do next after pausing its easing cycle to hold rates at 14% on Thursday. JPMorgan expects it to stay on hold for the rest of 2022 but Goldman Sachs predicts a U-turn and a rate hike in the second quarter. Turkey’s lira was last up 0.5% at 13.36 per greenback. In Latin America, as iron ore prices rose on monetary easing in China – the biggest consumer – producer Brazil’s real firmed 1% while miners of the steel-making ingredient Vale and Usiminas rose 0.2% and 0.5%. Most other EM currencies also rose as the dollar dipped after U.S. Treasury yields retreated from two-year highs. Expectations that the Federal Reserve would sound hawkish as it tried to tame inflation underpinned the surge. MSCI’s index of emerging market currencies inched closer to their highest since June with South Africa’s rand jumping 1.2%, while Mexico’s peso climbed 0.5%. As copper prices rose, top producer Chile’s peso hit two-month highs. In the world’s second biggest copper exporter, Peru, MMG’s Las Bambas copper mine inked a deal with local residents with increased job offers for locals in a bid to avoid future road blockades that could disrupt operations. Key Latin American stock indexes and currencies at 1405 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1255.12 1.23 MSCI LatAm 2255.98 1.37 Brazil Bovespa 109051.26 0.96 Mexico IPC – – Chile IPSA 4501.33 0.71 Argentina MerVal – – Colombia COLCAP 1582.84 -0.15 Currencies Latest Daily % change Brazil real 5.4080 1.07 Mexico peso 20.4119 0.44 Chile peso 804.9 0.40 Colombia peso 3971.71 0.47 Peru sol 3.8608 0.39 Argentina peso 104.3100 -0.06 (interbank) (Reporting by Susan Mathew in Bengaluru; Editing by Bernadette Baum)
