Czech crown, Brazilian real rise after c.bank decisions
The Czech crown recovered from an initial
drop after the country’s central bank held the key borrowing
rate unchanged on Thursday, while Brazil’s real rose after an
interest rate hike overnight.
The crown rose up to 0.5% against the euro, and
was last at 24.58 as the bank said it would continue preventing
excessive fluctuations of the currency.
In the first meeting under new governor, Ales Michl, the
bank held the key interest rate at 7% after nine consecutive
increases. Almost half of the economists polled by Reuters had
expected another small hike.
The currency fell as much as 24.66 after the decision before
“With inflation likely to peak over the next few months, we
doubt that there will be any appetite for further tightening in
this cycle,” research firm Capital Economics said in a note.
“We currently expect the first rate cut to come in Q2 of
next year, as we think that there will be clearer signs that the
economy is weakening and inflation pressures are easing.”
In Latin America, Brazil’s real rose 0.5% as the
country’s central bank weighed a smaller increase in September,
following an expected 50 basis point hike to 13.75% late on
In Argentina, the new economy minister, Sergio Massa,
announced measures aimed at healing the country’s ailing
finances, including pledges to meet a key deficit target and
stick with already agreed debt payments.
Analysts weren’t impressed.
“The announced measures are underwhelming and fall short of
a comprehensive and coherent plan to rebalance the Argentine
economy,” Sergio Armella, an economist at Goldman Sachs wrote in
“Argentina needs a more conventional and disciplined policy
mix,” he added, including “a credible path toward structural
fiscal consolidation and an exchange rate that is allowed to
reflect the macro fundamentals.”
The tightly controlled Argentine peso slipped another
0.2%, while the more popular informal peso jumped 1.7%,
widening the gap between the two rates.
Argentina’s main stock index climbed 1%.
As the dollar edged lower, most other emerging market
Colombia’s peso rose 0.4% after the technical team of
the country’s central bank predicted a higher benchmark interest
rate than that projected by the market, citing increased
inflationary pressures and stronger-than-expected economic
growth. The central bank had hiked to 9% last week.
Meanwhile, ratings agency Fitch warned that Colombian
President-elect Gustavo Petro’s reform agenda creates
uncertainties for the country’s growth and fiscal outlook.
Key Latin American stock indexes and currencies at 1426 GMT:
Stock indexes Latest Daily %
MSCI Emerging Markets 995.17 0.95
MSCI LatAm 2119.96 2.05
Brazil Bovespa 105156.72 1.33
Mexico IPC 47360.98 0.79
Chile IPSA 5187.87 -0.35
Argentina MerVal 121221.19 0.69
Colombia COLCAP 1273.68 -0.43
Currencies Latest Daily %
Brazil real 5.2538 0.43
Mexico peso 20.3750 0.40
Chile peso 906.5 0.43
Colombia peso 4275.2 0.49
Peru sol 3.8985 0.00
Argentina peso 132.6400 -0.17
(Reporting by Susan Mathew in Bengaluru; Edited by Paulo
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