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Mexico's consumer prices rise 0.27% in early March

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Argentina dollar bonds hit record highs as Milei rally

powers on

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FX subdued, eyes weakest weekly showing in four

By Ankika Biswas

March 22 (Reuters) - Most Latin American currencies

dropped against a firm dollar on Friday, with investors awaiting

Colombia's rate decision at the end of a week marked by rate

cuts from regional peers, while Russia held rates, drawing

limited reaction from the rouble.

The MSCI index tracking Latam currencies

shed 0.1%, on track to log its weakest weekly performance in

four, with the dollar headed for second weekly gain. That comes

in the face of Japan's historic rate hike and Switzerland's

surprise rate cut highlighting the gap between the Federal

Reserve and others in interest rate settings.

Brazil's real, Chile's peso, Peru's sol

fell between 0.1%-0.4% against the greenback.

The stocks gauge also fell 0.3%, but was set

for a weekly gain.

After a raft of policy decisions across developed and

emerging markets throughout the week, Russia held rates steady

at 16%, warning inflationary pressure remained high and tight

monetary conditions would be maintained for a long time to try

to return inflation to the 4% target.

The rouble weakened towards the 93-per-dollar

mark, struggling to latch on to support from high oil prices and

favorable month-end taxes.

"We still think inflation will end the year above target due

to rapid economic growth and loose fiscal policy, but it's

looking more likely that the central bank might start an easing

cycle in the third quarter once inflation has clearly reached a

peak," said Liam Peach, senior emerging markets economist,

Capital Economics.

All eyes will be on Colombia's monetary policy decision

during the day. A Reuters poll reflected expectations of a

50-basis-point cut, double the December and January cuts.

Colombia's peso slipped 0.1%, while stocks

dropped 0.2%.

"While risks are skewed in direction of a stronger cut

supported by downbeat 2023 GDP figures, Banrep would rather err

on the side of caution," Citigroup analysts wrote.

This comes on the heels of Mexico's first rate cut, of 25

bps, since 2021 and Brazil's 50-bps rate cut this week.

Meanwhile, data showed Mexico's consumer prices rose

alongside expectations in the first half of March, while core

inflation beat estimates, reinforcing bets of slow-paced

upcoming rate cuts. Bucking the trend, Mexico's peso

gained 0.3%.

Another data set showed the country's economy shrank 0.6% in

January from December and expanded 2% year-on-year.

Meanwhile, Argentina's dollar-denominated international

bonds continued to rally, with the 2030 paper

posting its highest-ever closing price on Thursday.

Key Latin American stock indexes and currencies:

Stock indexes Latest Daily %

change

MSCI Emerging Markets 1039.08 -0.88

MSCI LatAm 2520.40 -0.33

Brazil Bovespa 127629.47 -0.41

Mexico IPC 56579.70 -0.14

Chile IPSA 6518.14 0.5

Argentina MerVal 0.00 0

Colombia COLCAP 1319.19 -0.18

Currencies Latest Daily %

change

Brazil real 4.9846 -0.12

Mexico peso 16.6938 0.25

Chile peso 976.2 -0.35

Colombia peso 3909.87 -0.11

Peru sol 3.6789 -0.08

Argentina peso (interbank) 854.5000 0.00

Argentina peso (parallel) 1010 1.98