* Brazilian inflation slows but not by as much as expected * Fitch downgrades Argentina to ‘C’ * Peru c.bank sees lower 2023 growth, drop in investment due to protests * Mexican economy grows 0.6% in January from December * Latam FX adds 0.2%, set to rise 1.6% this week (Adds comment; updates prices, details) By Shreyashi Sanyal and Bansari Mayur Kamdar March 24 (Reuters) – The Chilean peso fell against a strong U.S. dollar on Friday, lagging its Latin American peers as worries reemerged about the health of the global banking sector, but most currencies in the region were set for weekly gains. The peso shed 0.4%, as the safe-have dollar rose 0.5% after European banking stocks including Deutsche Bank and UBS Group sank on worries that the sector’s worst problems since the 2008 financial crisis have yet to be contained. Weakening copper prices also weighed on the currency of Chile, the No. 1 producer. Still, the peso was set for weekly gains, while the broader MSCI Latin American FX index was on track for its best weekly performance in nearly a month. Currencies of resource-rich Latin America have benefited from a largely weaker dollar this week and rising commodity prices in the face of the U.S. Federal Reserve signaling it was on the verge of pausing its interest rate increases. Brazil’s real gained 0.9%, leading regional gains. The country’s consumer prices rose slightly more than expected in the 12 months to mid-March, data showed, further dashing expectations that its central bank might ease monetary policy soon. “Brazil’s disinflation progress has been spectacular – today’s mid-month prints showed further moderation to 5.36% year-on-year – but waves of political and policy noise keep the central bank on its toes,” said Natalia Gurushina, emerging markets fixed income economist at VanEck. “High real policy rates notwithstanding, EM central banks are not in a rush to cut.” Brazil’s central bank held the Selic benchmark interest rate at 13.75% on Wednesday, for the fifth straight meeting. Focus will now shift on Brazilian President Luiz Inacio Lula da Silva’s proposal for new fiscal rules, an announcement that was delayed till after his trip to China. But Lula was diagnosed with mild pneumonia and will delay his departure to China until Sunday. In Mexico, the peso added 0.6% against the greenback. Data showed its economy grew 0.6% in January from December and expanded 4.4% from January of 2022. “Mexican data to start the year have been solid and would support continued tightening from Banxico,” Herrera said. The Peruvian sol edged 0.3% up against the greenback even as its central bank forecast lower economic growth this year due to months-long social unrest and torrential rains in March, with the bank’s chief saying he expected “zero percent” growth in the first quarter. Fitch Ratings downgraded Argentina’s foreign currency rating to ‘C’ from ‘CCC-‘ after the country’s executive decree forcing some public-sector entities to enter operations involving sovereign debt securities, which might lead to a potential default. Overall, emerging market currencies slipped 0.4% on Friday but still headed for their second straight week of gains. Key Latin American stock indexes and currencies at 1855 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 972.24 -0.57 MSCI LatAm 2077.11 0.48 Brazil Bovespa 98880.50 0.97 Mexico IPC 52851.73 0.05 Chile IPSA 5238.97 -0.69 Argentina MerVal 219276.74 -2.507 Colombia COLCAP 1099.81 0.26 Currencies Latest Daily % change Brazil real 5.2557 0.62 Mexico peso 18.4550 0.53 Chile peso 810.2 -0.52 Colombia peso 4727.5 0.57 Peru sol 3.7705 -0.38 Argentina peso (interbank) 205.7500 -0.18 Argentina peso (parallel) 385 1.56 (Reporting by Shreyashi Sanyal and Bansari Mayur Kamdar in Bengaluru Editing by Marguerita Choy and Richard Chang)
