EMERGING MARKETS – Dollar Weakness Lifts LatAm FX, Stocks Hit Two-Month Highs

Jan 18 (Reuters) – Most Latin American currencies rallied against the dollar on Wednesday after U.S. data offered fresh signs of moderating inflation and a weakening economy, raising expectations that the Federal Reserve will slow the pace of interest rate hikes. The Brazilian real rose 0.4% to 5.08 per dollar, after earlier hitting a two-month high of 5.06. The peso of oil producer Colombia and copper-rich Chile strengthened as commodity prices rose. Broadly speaking, emerging market currencies rallied as the dollar took a hit after data showed US producer prices fell more than expected in December and retail sales fell due to a drop in purchases of motor vehicles and a range of other goods. The data fueled bets that the Fed may not tighten monetary policy as aggressively this year. “This kind of rapid deterioration suggests that the Fed’s hawkish policy has indeed kicked in. Combined with softer CPI and other signs of slowing inflation, the need for more rate hikes is increasingly in question,” said David Russell, vice president of market intelligence. in TradeStation. A group. An index of Latin American shares rose 1.5% to its highest level in more than two months as Wall Street’s main indexes opened higher after the data. Brazil’s Bovespa added 1.3%, with state miner Vale among the top gainers as iron ore prices rose. Meanwhile, Argentina will buy more than $1 billion worth of foreign bonds to improve the South American country’s debt profile, Economy Minister Sergio Massa said, seeking to send a positive signal to markets despite low reserve levels. The 2030 note jumped 7.1% to 35.69 cents on the dollar at 11:15 a.m., a trader told Reuters. Elsewhere, President Tayyip Erdogan signaled that Turkey will hold elections on May 14, a month earlier than he previously indicated, ticking the clock on perhaps the most consequential vote in the republic’s century-long history. Polls show that the parliamentary and presidential elections will be close. The Turkish lira traded mostly unchanged at 18.79 to the dollar, not far from its all-time low of 18.84. Key Latin American Indices and Currencies: Latest Diary% Change MSSCI Market Market 102908.41 1.32 Mexico IPC 53445.32 0.6 Chile IPSA 514499.99 -2.397 Colombia Colcap 1343.95 0.76 Coluctia Last day Brazil Last 5.0833 0 .41 Mexican peso 18.6763 -0.14 Chilean peso 809.9 0.56 Colombian peso 4689.45 0.76 Peruvian peso 3.8211 -0.14 Argentine peso (interbank) 182.7900 -0.16 -0 ,16 reporters by Šarestaniru S;

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