Latam currencies rise as markets digest Powell remarks

Updated at 03:04 p.m. ET/ 1904 GMT

By Johann M Cherian

July 9 (Reuters) –Most Latin American currencies advanced on Tuesday as investors digested comments from the U.S. Federal Reserve Chair Jerome Powell, while signs of persistent price pressures in Mexico and Colombia added to their respective currencies’ gains.

MSCI’s index tracking Latin American currencies .MILA00000CUS climbed 0.8% against the dollar, as Powell in his Congressional testimony said inflation had been improving in recent months and that “more good data would strengthen” the case for looser monetary policy.

Brazil’s real BRL= advanced 1.1% and was among the region’s top performers, ahead of Wednesday’s June inflation data, with economists expecting the index to rise to 4.35%, from 3.93% in the month before.

Mexico’s currency MXN= strengthened 0.5% to a two-week high after data showed headline inflation accelerated more than expected for the fourth-straight month in June on a boost from food costs.

Reflecting on the report, Bank of Mexico Deputy Governor Jonathan Heath said on social media platform X that domestic inflation in June was “very worrying”.

Still, Kimberley Sperrfechter, emerging markets economist at Capital Economics, said: “While there’s still a lot of uncertainty around the next rate decision in August, we think that the easing of core price pressures, alongside the weak run of activity data and the rebound in the peso leave an August rate cut in play.”

Colombia’s peso COP= appreciated 0.8% to a nearly one-month high after data showed inflation stood at 0.32% in June, higher than expectations of 0.27% by economists polled by Reuters.

Chile’s central bank issued new regulations allowing banks to acquire securitized bonds with underlying assets of credits originated by the same institution, so-called retained securitization. Local sovereign bonds were largely flat, while the peso CLP= jumped 1.1%.

MSCI’s index tracking regional bourses .MILA00000PUS climbed 1.2%. The index has lost over 14% year-to-date as political uncertainty in the region’s top economies, along with central banks delaying monetary policy easing, weighed on risk taking.

Brazilian stocks .BVSP gained 0.4%, with Iguatemi IGTI11.SA climbing 1%, after the company signed a contract with Combrashop to take a 54% stake in Shopping Rio Sul.

Mexico’s main stock index .MXX added 0.8%. Real estate investment trust Fibra Macquarie FIBRAMQ12.MX announced it received the backing of its shareholders for its takeover bid of competitor Terrafina Real Estate. Shares of Fibra were up 0.2%.

In Argentina, President Javier Milei signed a long-delayed pact with provincial governors. Local markets were closed for a holiday.

Key Latin American stock indexes and currencies:

Reporting by Johann M Cherian and Shristi Achar A in Bengaluru
Editing by Matthew Lewis and Sandra Maler