Mexican peso outperforms on c.bank hike; Latam stocks slide as Wall St wobbles

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Latin American stocks fell sharply on

Thursday as a Wall Street rally lost steam on heightening

recession worries, while Mexico’s peso rose after the central

bank hiked the key interest rate by a record 75 basis points as

signaled more.

The Mexican peso, which was flat just moments before

the decision, rose 0.3% to 19.98, as it followed data that

showed inflation in the whole country by more than expected in

early June.

The peso outperformed Latin American peers, which slid

against a stronger dollar as investors fretted over the impact

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of aggressive monetary policy tightening on growth.

The Mexican decision was the latest in a slew of central

banks moves on Thursday.

In a surprising move, Egypt’s central bank kept key interest

rates unchanged on Thursday at 11.25%, Markets were expecting a

hike by 50 bps.

“With inflation set to rise further above the central bank’s

target range, we still think that the next move in rates will be

up, ”said James Swanston, Middle East and North Africa Economist

and Capital Economics.

“We expect a further 150bp of hikes to 12.75%, by the end of

the year – although, following today’s decision and recent

comments, the risk to our forecasts lie to the downside. ”

Egyptian stocks had closed lower before the

decision, while the currency traded flat through most of

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the session.

Egypt moved in contrast to other central bank decisions on

Thursday which moved as expected: Indonesia stood pat on the

interest rate, as did Turkey despite inflation at 73%.

Philippines hiked by 25 bps but the peso still fell 0.5%

to over 16-year lows.

Surging inflation has seen most emerging market central

banks embark of an aggressive tightening cycle. With energy

prices rising and the US interest rates heading higher, the

banks may have to extend the cycle.

Brazil’s real hit four-month lows, despite a

raise in the central bank’s growth outlook for 2022 to 1.7% from

1%.

As oil prices fell, crude exporter Colombia’s peso

dropped 2%. A strike at the world’s largest copper producer in

Chile, saw the country’s currency slip further in

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record low territory.

Among stocks, Brazilian and Mexican stocks

slid about 1% each, while Colombia’s COLCAP index and

CHile’s IPSA slumped 2.4% each.

Wall Street struggled for direction with the Down Jones

and the S&P 500 turning to losses at one point, as

investors worried about recession.

Key Latin American stock indexes and currencies at 1858 GMT:

Stock indexes Latest Daily%

change

MSCI Emerging Markets 994.72 0.11

MSCI LatAm 2026.03 -2.83

Brazil Bovespa 98159.35 -1.37

Mexico IPC 46766.15 -0.8

Chile IPSA 4940.18 -2.3

Argentina MerVal 82972.91 -3.14

Colombia COLCAP 1338.48 -2.46

Currencies Latest Daily%

change

Brazil real 5.2326 -1.07

Mexico peso 20.0039 0.20

Chile peso 905.2 -1.81

Colombia peso 4096.13 -1.98

Peru sol 3.7549 -1.12

Argentina peso 124.0800 -0.17

(interbank)

(Reporting by Susan Mathew in Bengaluru;

Editing by Nick Zieminski)