EMERGING MARKETS-Mexican peso outperforms on hike; Latam stocks slide as Wall St wobbles

By Susan Mathew June 23 (Reuters) – 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 country rose 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 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 at 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 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 U.S. 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 to 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 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)

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