* Argentina inflation to cool slightly, analysts say * Brazil services activity drops in October * Colombia’s central bank set for December rate hike * U.S. dollar sinks as inflation rise moderates (Updates prices, details; adds chart) By Susan Mathew and Bansari Mayur Kamdar Dec 13 (Reuters) – Emerging market currencies rose on Tuesday after cooling U.S. inflation lifted expectations that the Federal Reserve would soften its pace of interest rate hikes, while South Africa’s rand surged on hopes that President Cyril Ramaphosa would stay in power. The rand jumped 1.9% after South Africa’s ruling African National Congress (ANC) stopped an impeachment process from being launched against President Cyril Ramaphosa, as most of its lawmakers voted to reject an inquiry report into alleged misconduct. Mexico’s peso and and Colombia’s peso jumped between 1.5% and 1.8%, while Chile’s peso was up 1.0%. China’s yuan firmed 0.5%. MSCI’s index of emerging market currencies rose 0.5%, as the dollar sank 0.8%. U.S consumer prices marked their smallest annual increase in inflation in nearly a year, climbing 7.1% on a year-on-year basis in November, following a 7.7% rise in October. Economists polled by Reuters had expected an increase of 7.3% last month. Bets for a smaller 50-basis-point rate hike by Fed on Wednesday rose to 97%. “The bounce back today is a reaction to the U.S. CPI print, which came in quite low and have caused rate expectations in United States to be pared back. This, in turn, benefited currencies in Latin America,” said Kimberley Sperrfechter, emerging markets economist at Capital Economics. Central banks in Mexico and Colombia are also due to make policy decisions this week, with the key policy rate in Mexico expected to rise by basis points to 10.5%. Mexico’s stocks were flat. Shares of Mexican telecoms firm Megacable and broadcaster Grupo Televisa jumped 9.5% and 12.4%, respectively, after Reuters reported that Televisa is bidding to merge the firms’ pay TV and broadband operations. Brazil’s main stock index slipped 0.2%, while the real edged up 0.1%. Data showed services activity in Brazil dropped in October for the first time in six months, as well as central bank warnings that fiscal stimulus could prove inflationary. Peru’s currency underperformed regional peers, slipping 0.1%, after ratings agency S&P Global cut the South American country’s outlook to negative from stable, citing risks to the sovereign credit worthiness from a political standstill and a challenging relationship between the country’s executive and legislative branches of government. Argentina inflation is expected to have cooled slightly in November, a Reuters poll of analysts showed, though remains high with prices set to rise nearly 100% this year. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 968.18 0.48 MSCI LatAm 2108.28 1.07 Brazil Bovespa 105133.34 -0.2 Mexico IPC 50486.51 0.04 Chile IPSA 5226.96 -0.57 Argentina MerVal 167296.07 0.498 Colombia COLCAP 1235.11 0.52 Currencies Latest Daily % change Brazil real 5.2829 0.54 Mexico peso 19.5879 1.31 Chile peso 857.9 1.08 Colombia peso 4760.66 1.67 Peru sol 3.8193 0.53 Argentina peso (interbank) 171.7800 -0.23 Argentina peso (parallel) 311 0.32 (Reporting by Susan Mathew and Bansari Mayur Kamdar in Bengaluru; Editing by Paul Simao and Alistair Bell)
