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A gauge for Latin American currencies

rose on Friday as the dollar dipped, clawing back some gains in

a volatile week marred by risk-off sentiment on global growth

fears, while Mexico’s peso strengthened after its central bank

hiked interest rates.

Mexico’s peso gained 0.7% against the dollar,

bouncing off one-week lows after the Bank of Mexico on Thursday

raised the benchmark interest rate by 50 basis points to 7.0%,

as expected.

Peru’s sol slipped 0.3% even after its own central

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bank raised rates by 50 basis points to 5%, the tenth

consecutive hike as the copper-producing Andean nation battles

spiraling inflation.

Argentina’s central bank, too, announced a hike in the

benchmark interest rate by 200 basis points to 49% after data

earlier in the day showed inflation in the 12 months through

April was running at 58%.

“Inflation has risen to levels dangerous, and the only way

in theory to combat that is raising rates, but central bank

action isn’t determining the value of foreign currency

currently… We need global factors to come together for a more

positive Latam outlook, as everything is so downwardly revised,”

said Juan Perez, director of trading at Monex USA.

MSCI’s index of Latam currencies edged 0.1%

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higher for the week, as it managed to keep its head above water

after the greenback saw a boost in late April on U.S. rate hike

expectations. Chile’s peso and Colombia’s peso

hovered near pandemic lows.

“We’re back to the levels of market fear and chaos as in the

beginning of the pandemic in 2020 – 2022 is another moment of

shock,” Perez added, citing risks around China, rising U.S.

interest rates, slowing growth and the war in Ukraine.

Latin American stocks were headed for a 0.1%

weekly gain by midday trading after a week which saw investors

moving away from riskier assets amid broader recessionary fears,

and were tracking their sixth straight week in the red.

Headlines pointing to smoother commercial trade, new trade

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patterns with Latin American countries or a resolution in the

Russia-Ukraine war could lift stocks in the weeks to come,

analysts say.

Brazil’s real, Chile’s peso and Colombia’s

peso were set for their fourth straight weeks in the red,

skidding between 0.1% and 1.2% on the week.

Petrobras shares jumped 1.7%, boosting Brazil’s

benchmark Bovespa. Brazil’s antitrust watchdog CADE said

the sale of the state-run oil company’s Reman refinery to fuel

distributor Atem was approved with no restrictions.

Key Latin American stock indexes and currencies at 2014 GMT:

Stock indexes Latest Daily %

change

MSCI Emerging Markets 1005.54 1.79

MSCI LatAm 2257.17 2.16

Brazil Bovespa 107160.51 1.39

Mexico IPC 49534.93 0.46

Chile IPSA 4849.99 2.88

Argentina MerVal 88612.42 3.615

Colombia COLCAP 1512.12 0.42

Currencies Latest Daily %

change

Brazil real 5.0576 -0.02

Mexico peso 20.1118 0.65

Chile peso 860.3 0.50

Colombia peso 4103.45 -0.01

Peru sol 3.788 -0.74

Argentina peso (interbank) 117.4200 -0.14

Argentina peso (parallel) 200.5 1.50

(Reporting by Anisha Sircar and Shreyashi Sanyal in Bengaluru

Editing by Alistair Bell)