* Chilean c.bank sees below-neutral policy for next 2 years
* Magazine Luiza leads Brazil stocks higher
* Peruvian sol bucks gloom, up 0.4% on GDP rise
* Rising commodity prices should boost Latam stocks, FX -
Invesco
(Updates prices)
By Ambar Warrick and Susan Mathew
July 15 (Reuters) - Chile's peso looked set to post its
worst session in two months on Thursday, leading losses across
most Latin American currencies, as the country's central bank
indicated that monetary policy would remain loose for longer.
The peso dropped 1.7%. The central bank hiked rates
to 0.75% to stall inflation, but projected monetary policy to
remain below neutral levels for the next two years.
"A significant improvement in the COVID backdrop, above
target headline and core inflation, and supportive external
backdrop have reduced to a very significant extent the need for
monetary policy to continue to support the recovery," Goldman
Sachs analysts wrote in a note.
They see Chile's key rate between 1.5% to 1.75% by end-2021,
while Credit Suisse sees it at 1.5%, lagging other regional
peers that have adopted hawkish stances.
MSCI's index of Latin American currencies
dropped 0.3%, underperforming a broader emerging markets index
, as the dollar recovered from U.S. Federal
Reserve Chairman Jerome Powell sticking to his dovish stance.
Brazil's real fell 0.9% after rising strongly in the
previous session, while Mexico's peso weakened 0.4%,
coming under pressure from a recent spike in COVID-19 cases in
the country.
The Peruvian sol outperformed, up 0.4%, after the
economy showed continued growth, rising 47.8% year-on-year in
May, its third monthly advance after a series of contractions
during a fresh wave of the coronavirus.
Argentina's inflation rate clocked in at 3.2% in June, still
high but edging down from earlier in the year, data showed.
Ten-year inflation linked bonds continued their
move higher.
The International Monetary Fund and Argentina are
negotiating towards a new Extended Fund Facility program to deal
with the South American country's $45 billion debt to the Fund,
it said on Thursday.
While most Latin American bourses joined a sell-off in
global equities, Mexico's index posted its best day in
more than three months, led by a 7% surge in copper producer
Grupo Mexico that tracked the red metal's prices
higher.
Brazil's Magazine Luiza jumped nearly 5% after it
said it would raise more funds and buy e-commerce company Kabum
Comercio Eletronico for 1 billion reais ($196.53 million).
Rising commodity prices and a strong outlook for the mining
sector, especially given rising demand for "green metals" such
as copper and cobalt, should boost Latin American stocks and
currencies, potentially aided by a weaker dollar.
Key Latin American stock indexes and currencies:
Stock indexes Latest Daily %
change
MSCI Emerging Markets 1346.97 0.66
MSCI LatAm 2580.08 -0.89
Brazil Bovespa 127431.11 -0.76
Mexico IPC 50418.89 1.99
Chile IPSA 4155.09 -0.08
Argentina MerVal 63327.10 -0.988
Colombia COLCAP 1277.39 -0.55
Currencies Latest Daily %
change
Brazil real 5.1305 -0.91
Mexico peso 19.9766 -0.55
Chile peso 757.5 -1.74
Colombia peso 3812.02 -0.58
Peru sol 3.9369 0.42
Argentina peso 96.1800 -0.02
(interbank)
(Reporting by Ambar Warrick; Editing by Sonya Hepinstall and
Alex Richardson)
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