Most Latam currencies are slipping; the outlook for rate hikes pushes the Brazilian real up

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  • Mexican economy contracts more than expected
  • Inflation in Brazil hits its highest level in almost 20 years
  • Turkish lira up 0.6%; Central bank, banks discuss rates Hungarian forint moves away from all-time lows

Nov. 25 (Reuters) – Latin American currencies lagged behind their emerging market counterparts on Thursday as the Mexican peso was hit by the contraction in economic growth, while in Brazil inflation close to 20-year highs kept the currency from taking losses on speculation on steep interest rate hikes.

After falling 1% on Wednesday on central bank leadership uncertainty, the Mexican peso extended its losses for a sixth consecutive session, down 0.7% to stay near eight-month lows. Read more

Seasonally adjusted data on Thursday showed Mexico’s economy contracted 0.4% in the third quarter from the previous three months, with a sharp contraction in service sector activity driving the decline . A Reuters poll forecast a contraction of 0.3%. Read more

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“Mexico’s recovery will remain one of the weakest in the region,” said Nikhil Sanghani, emerging markets economist at Capital Economics.

Sanghani noted that even if business support services GDP were unchanged from the second quarter, overall output would have remained well below its pre-pandemic level.

It comes a day after figures showed annual inflation rose faster than expected to 7%, its highest level in more than a decade, adding pressure on the central bank to tighten further. Politics.

Volumes were expected to be low with the US Treasury and stock markets closed for the Thanksgiving holiday.

The Brazilian real was 0.5% higher, faring better than its regional counterparts, as expectations of a sharp rate hike next month rose after consumer prices rose slightly more than expected. Month over month, however, prices have come down.

In October, the central bank had risen by 150 basis points, bringing increases this year to 575 basis points. Read more

Brazil also attracted $ 2.49 billion in foreign direct investment in October, below the $ 4 billion forecast by economists in a Reuters poll.

Shares in Brazil were raised by state-owned oil company Petrobras (PETR4.SA), which rose more than 3% after a sharp increase in its five-year investment plan to $ 68 billion, a policy revised dividend plan including quarterly payments and a more flexible debt target. related to payments. Read more

Elsewhere, the Turkish lira held its own, rising 0.6% after the country’s central bank governor said he discussed recent interest rate cuts with bankers in a meeting. [nL1N2SG0IR]

Turkey’s central bank on Thursday signed a memorandum of understanding with the central bank of the United Arab Emirates to promote cooperation in the central banking area. Read more

The Hungarian forint was expected to experience its best session in four months, moving away from all-time lows after the country’s central bank raised its one-week deposit rate from 40 basis points to 2.9% as it fight against rising inflation risks. Read more

Major Latin American Stock Indices and Currencies at 6:26 p.m. GMT:

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Reporting by Susan Mathew and Shreyashi Sanyal in Bengaluru Editing by Jonathan Oatis

Our standards: Thomson Reuters Trust Principles.

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