Peru’s sol lifts Latam currencies as investors await U.S. inflation data

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Latin American currencies edged

higher on Wednesday as investors looked ahead to the release

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this week of U.S. inflation data, while Peru’s sol led the

broader index higher after the government won a confidence vote

amid fierce protests.

The MSCI’s index for Latam currencies gained

0.5% in early trading and regional stocks jumped

1.1%, outperforming emerging market peers.

All eyes were on the release of U.S. Consumer Price Index

data on Thursday which could sway the Federal Reserve’s monetary

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policy tightening plans.

The Peruvian sol jumped 0.9%, hitting its highest level in

more than six months against the greenback.

Peru’s Congress approved a confidence vote in the government

on Tuesday, supporting the new prime minister and Cabinet amid a

political crisis following anti-government protests that have

left 40 people dead and hundreds injured.

“The confirmation gives newly minted President (Dina)

Boluarte breathing room and allows her to focus on pressing

issues such as the second early election vote, which is top

order of business after the first vote took place in December,”

Citi strategists wrote in a client note.

The office of the Andean nation’s top prosecutor said it has

launched an inquiry into Boluarte and members of her Cabinet

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over the violent protests.

“Protests are likely to continue in the short term and add

pressure to President Boluarte, who is now facing scrutiny from

the attorney general’s office about the way she has responded to

the protests,” Citi added.

Colombia’s peso rose 0.5% as a jump in crude prices

supported the currency of the oil producer.

Mexico’s peso was flat against the greenback.

Data showed Mexican industrial output was unchanged in

November from October but rose 3.2% on a year-over-year basis.

Economists, however, expect the sector to be hurt by an economic

slowdown in the United States.

The Brazilian real was largely flat against

the dollar after a volatile start this week. Supporters of

far-right former President Jair Bolsonaro stormed the seats of

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power in Brasilia on Sunday, ransacking the Supreme Court,

Congress and presidential offices.

Data showing Brazil’s retail sales volumes posted their

biggest drop in five months in November, affected by higher fuel

prices and a weak Black Friday performance, also weighed on the

real.

Elsewhere in emerging markets, Egypt’s pound rebounded after

briefly hitting a new low below 32 to the dollar as the Egyptian

central bank moved to a more flexible exchange rate under the

terms of an International Monetary Fund financial support

package.

Key Latin American stock indexes and currencies at 1447 GMT:

Stock indexes Latest Daily %

change

MSCI Emerging Markets 1015.92 0.19

MSCI LatAm 2244.38 1.09

Brazil Bovespa 111080.82 0.24

Mexico IPC 52461.07 0.22

Chile IPSA 5176.48 0.62

Argentina MerVal 218484.55 1.239

Colombia COLCAP 1341.28 0.49

Currencies Latest Daily %

change

Brazil real 5.1958 0.10

Mexico peso 19.0565 -0.04

Chile peso 823.8 0.25

Colombia peso 4753.19 0.65

Peru sol 3.7698 0.35

Argentina peso (interbank) 180.6800 -0.16

Argentina peso (parallel) 356 0.28

(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by

Paul Simao)