Czech crown, Brazilian real rise after c.bank decisions

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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

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expected another small hike.

The currency fell as much as 24.66 after the decision before

rebounding.

“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

Wednesday.

In Argentina, the new economy minister, Sergio Massa,

announced measures aimed at healing the country’s ailing

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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

a note.

“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%.

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As the dollar edged lower, most other emerging market

currencies gained.

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 %

change

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 %

change

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

(interbank)

(Reporting by Susan Mathew in Bengaluru; Edited by Paulo

Prada.)