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Mexico c.bank head: Rate cut doesn't signal inflation

victory

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Argentine markets in celebratory mood ahead of Easter

break

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FX up 0.2%, Stocks flat

By Ankika Biswas

March 25 (Reuters) - Currencies of most resources-rich

Latin American nations gained on Monday, boosted by a weak

dollar and strengthening prices of key commodities, while focus

also moved to crucial U.S. inflation data due later in the week.

The MSCI index tracking Latam currencies was

up 0.2% at 1430 GMT, with the U.S. dollar index down

0.26% on the threat of currency intervention from Japanese

authorities and a government-driven rally in China's yuan.

The Latam currencies index was on track for a second

straight monthly increase in March, a month that saw major

developed countries' central banks warming towards policy easing

and further rate cuts from emerging markets.

"Real interest rates in both countries (Brazil and Mexico)

are still among the highest in EM (emerging markets), which

should support currencies and local debt markets but will remain

a drag on equities in coming months," Jon Harrison, managing

director of EM macro strategy at TS Lombard, wrote.

Investors also awaited the U.S. Federal Reserve's key

inflation gauge - the core personal consumption expenditure

(PCE) price index - due on Friday, after Chair Jerome Powell

last week reassured markets of three rate cuts this year.

Major iron ore supplier Brazil's real strengthened

0.3% against the greenback, as the mineral's prices rose,

supported by hopes of further demand recovery in top consumer

China and Beijing's pledge to support its struggling property

market.

Oil prices jumped around 1%, with the benchmark Brent crude

topping $86-a-barrel on heightened supply concerns,

aiding a 0.3% rise in major producer Mexico's peso.

A media report cited the country's central bank head saying

the latest interest rate cut did not signal an end to the battle

against inflation. This follows a 25-basis-point cut last week.

The Chilean peso gained 0.5% against the dollar

after sharp losses last week. It is the worst performer among

its major peers so far in 2024.

Bucking the trend, Peru's sol shed 0.4% due to weak

copper prices. Peru is one of the top producers of the metal.

Meanwhile, Argentina's markets were in celebration mode

ahead of the long Easter public holiday with sovereign bonds and

equities on a prolonged rally, buoyed by fiscal tightening and

pro-investor measures taken by libertarian President Javier

Milei.

The Colombian equity market was closed on Monday for a

public holiday.

Key Latin American stock indexes and currencies:

Stock indexes Latest Daily %

change

MSCI Emerging Markets 1037.17 -0.21

MSCI LatAm 2512.45 0.08

Brazil Bovespa 126809.09 -0.17

Mexico IPC 56565.79 -0.08

Chile IPSA 6496.11 -0.31

Argentina MerVal 0.00 0

Colombia COLCAP 1329.48 0.6

Currencies Latest Daily %

change

Brazil real 4.9836 0.28

Mexico peso 16.7139 0.26

Chile peso 975.9 0.48

Colombia peso 3893.28 -0.03

Peru sol 3.703 -0.44

Argentina peso (interbank) 856.0000 -0.12

Argentina peso (parallel) 1000 3.00