EMERGING MARKETS-Latin American currencies edge lower after Fed minutes signal further caution on rates

Credit: REUTERS/EDGARD GARRIDO

By Shashwat Chauhan and Lisa Pauline Mattackal

Feb 21 (Reuters) - Most Latin American currencies edged lower on Wednesday, as minutes from the U.S. Federal Reserve's January meeting indicated policymakers remained wary of prematurely cutting interest rates.

The bulk of Fed policymakers in January were concerned about the risks of cutting interest rates too soon, according to minutes of the meeting released Wednesday.

MSCI's gauge for Latin American currencies .MILA00000CUSedged down 0.1%, with most currencies in the region flat to lower against the dollar.

However, traders maintained bets for a June start to interest rate cuts.

"The market is already beginning to pull back from expectations (for interest rate cuts) at the beginning of the year, markets and the Fed are finding a better equilibrium," said Chris Maxey, chief market strategist at Wealthspire Advisors.

MSCI's gauge of Latin American stocks .MILA00000PUS fell 0.3% after four sessions of gains.

Emerging market assets have struggled in 2024 as investors re-assess when borrowing costs could come down as U.S. inflation and economic data remains strong.

MSCI's Latam stocks index is down over 3% year-to-date versus a 0.3% rise in its global emerging markets index .MSCIEF.

"Many of (the) emerging markets look cheap relative to their own history, and countries around the world ... the struggle for investors is that it's not really a homogeneous universe," Maxey said.

The Chilean peso CLP= lagged regional peers, snapping two session of gains and losing 0.7% against the greenback. Chilean shares .SPIPSA dipped 1.5%.

The Brazilian real BRL=lost 0.2%, and Colombia's peso COP= was flat.

Brazil central bank President Roberto Campos Neto, said that Brazil has service inflation still at a level "slightly above" the ideal, assessing that monetary authority does not have the components necessary to conclude what the pace of the indicator's "last mile" will be on the path to convergence.

Shares in Brazil .BVSP fell 0.1% and Mexican shares .MXX lost 0.6%.

Brazilian motor maker WEGWEGE3.SA rose 6% after beating fourth-quarter earnings estimates.

Shares of Mexican conglomerate AlfaALFAA.MX dropped 2.3% after announcing plans to cut capital spending and dividends this year.

Mexico's peso MXN= also held steady at 17.0560 per dollar after data showed Mexican retail sales fell 0.9% in December.

Peru's sol PEN=lost 0.4%, on track to snap a four-day winning streak.

Brazil will announce Monday new measures to help foreigners with foreign exchange hedges on sustainable investments, sources told Reuters.

HIGHLIGHTS

** Financial debt for Mexico's Pemex totaled $106.8 bln at end of 2023

** World Bank warns emerging economies need to grow 'much faster' to repay debt

** Global debt hits record high at $313 trillion -IIF

Key Latin American stock indexes and currencies at 1930 GMT:

Latest

Daily % change

MSCI Emerging Markets .MSCIEF

1020.43

0.14

MSCI LatAm .MILA00000PUS

2571.11

-0.34

Brazil Bovespa .BVSP

129775.66

-0.11

Mexico IPC .MXX

56913.07

-0.55

Chile IPSA .SPIPSA

6252.15

-1.53

Argentina MerVal .MERV

1048758.03

-1.034

Colombia COLCAP .COLCAP

1264.33

1.51

Currencies

Latest

Daily % change

Brazil real BRBY

4.9376

-0.13

Mexico peso MXN=D2

17.0560

-0.05

Chile peso CLP=CL

967.9

-0.65

Colombia peso COP=

3920.5

0.08

Peru sol PEN=PE

3.7845

-0.36

Argentina peso (interbank) ARS=RASL

837.8000

-0.06

Argentina peso (parallel) ARSB=

1095

1.83

(Reporting by Shashwat Chauhan in Bengaluru Editing by Ros Russell and Cynthia Osterman)

((Shashwat.Chauhan@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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