Most Latam currencies hover near one-month highs; Brazil inflation data parsed

Updates as of 1455 GMT

By Johann M Cherian

July 10 (Reuters) –Most currencies across Latin America hovered near a one-month high on Wednesday, with Chile’s peso strengthening over 1%, while investors assessed the implications on monetary policy out of Brazil following an inflation report.

Brazil’s real BRL= ticked up 0.4% to a near one-month high after data showed consumer prices in the region’s largest economy rose less than expected in June, stoking expectations that the central bank might not opt for a rate hike at its next meeting.

“The fundamentals in Brazil are still quite strong. There are inflation issues, but it has been within a manageable range and the export of commodities has largely been supporting the currency,” said Rachel Ziemba, founder of Ziemba Insights.

MSCI’s index tracking Latin American currencies .MILA00000CUS rose 0.7% to levels seen more than a month ago.

The index bounced from losses it had notched for the past three months, when political uncertainty and worries around local fiscal stability dampened the mood.

Market participants were also focused on comments from U.S. Federal Reserve Chair Jerome Powell for any clues on interest rate cuts, which could set the tone for most central banks in emerging markets.

Mexico’s peso MXN= climbed 0.4% to hit more than a one-month high as traders reacted to comments by Deputy Governor Galia Borja, who said it is prudent for Banxico to avoid “hasty decisions” concerning monetary policy, a day after a hotter-than-expected inflation report.

Colombia’s currency COP= strengthened 0.9% in low volumes to levels seen nearly a month ago, a day after a hotter than expected inflation report. The peso was set to mark its ninth-straight session of gains – its longest winning streak since September 2023.

Still, concerns remain about the oil exporter’s fiscal conditions. An independent committee said on Tuesday that the country might need additional adjustments to its finances to comply with its fiscal rule in 2024 and 2025 to stabilize its debt, despite recent announcements on spending cuts.

Copper exporter Chile’s peso CLP= firmed 1.2% to nearly a one-month high as prices of the red metal ticked higher. A local central bank poll showed analysts expect the regulator to lower its benchmark interest rate by 25 basis points to 5.5% at its upcoming monetary policy meeting.

Fellow copper producer Peru’s sol PEN= appreciated 0.5%, to notch a three-week high.

MSCI’s index tracking Latin American bourses .MILA00000PUS climbed 1%, with Mexico’s main stock index .MXX up 0.7%.

Brazil’s Bovespa .BVSP gained 0.1%, limited by Vale’s VALE3.SA drop of 1.2%, with investors assessing 15 candidates to be the mining company’s next chief executive, put forward by a consulting firm, according to a newspaper report.

Argentina’s MerVal index .MERV added 1.7%. The local government published a sweeping decree aimed at opening up the country’s aviation sector.

Key Latin American stock indexes and currencies:

Reporting by Johann M Cherian in Bengaluru
Editing by Matthew Lewis