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The Mexican peso jumped sharply on

Thursday after its central bank surprised markets with a

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bigger-than-expected interest rate hike while Brazil’s real hit

a one-month low after mixed economic data.

The Mexican peso rose 0.9% against the dollar after

its central bank’s five-member governing board unanimously voted

to hike the benchmark interest rate by 50 basis points (bps) to

11.00% on Thursday, citing a complex inflation scenario.

Market expectations

had been for the central bank to follow in the footsteps of

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the U.S. Federal Reserve and deliver a 25 bps rate hike.

Data earlier in the day had shown consumer prices in

Latin America’s second largest economy rising slightly more than

expected in the year through January.

“MXN upward movement makes perfect sense considering how

the Banxico confidence in price growth not going away made them

act more hawkishly than the Fed,” said Juan Perez, director of

trading at Monex USA.

“This morning’s inflationary figures mean that the

central bank will see further need to be watchful and assess if

further hikes could be afforded,” Perez said.

The real slid 1.4% against the greenback,

dragging the MSCI’s index for Latin American currencies

down 0.2% by 1929 GMT.

Brazil’s consumer prices rose 0.53%, slightly less than

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expected, in January, but the data is unlikely to give the

central bank room for monetary easing in the short term.

Another survey showed retail sales volumes in Brazil posted

in 2022 their smallest annual growth in six years.

Brazil’s leftist President Luiz Inacio Lula da Silva

traveled to Washington on Thursday, invited to the White House

by President Joe Biden in a visit that will focus on support for

Brazilian democracy

Chile’s peso fell 0.2% against the dollar while the

Colombian peso added 0.5%.

Peru’s sol fell 0.1% against the greenback, ahead of

its central bank rate decision due at 2300 GMT where it is

expected to hike rates by 25 basis points.

Peru’s economic outlook is “very uncertain,” but strong

economic fundamentals could provide a buffer against prevailing

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risks, the International Monetary Fund (IMF) said on Thursday

after an annual visit to the country.

The Latin American stocks index declined

1.2% as weakness in Brazil’s Bovespa index weighed on

the index.

Elsewhere in emerging markets, South Korea’s plans to loosen

restrictions on its currency market will raise the won’s status

globally and boost business opportunities for local financial

firms, a vice finance minister told Reuters.

India’s Adani Group faced fresh concerns after financial

index provider MSCI said it was reviewing the free float

designation of some group company securities.

Istanbul’s stock exchange operator suspended trading until

Feb. 15 and canceled all of Wednesday’s trades following

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devastating earthquakes that struck Turkey and Syria.

Key Latin American stock indexes and currencies at 1929 GMT:

Stock indexes Latest Daily % change

MSCI Emerging Markets 1024.05 0.34

MSCI LatAm 2202.99 -1.23

Brazil Bovespa 108336.55 -1.47

Mexico IPC 52808.67 -0.6

Chile IPSA 5361.09 0.61

Argentina MerVal 247147.44 -1.191

Colombia COLCAP 1245.27 -1.49

Currencies Latest Daily % change

Brazil real 5.2677 -1.38

Mexico peso 18.7550 0.93

Chile peso 800.9 -0.24

Colombia peso 4707.11 0.48

Peru sol 3.8504 -0.13

Argentina peso 190.1900 -0.18

(interbank)

Argentina peso 375 1.60

(parallel)

(Reporting by Bansari Mayur Kamdar and Amruta Khandekar in

Bengaluru; editing by Jonathan Oatis)