EMERGING MARKETS-Mexican peso up after red-hot inflation data, rest of Latam falls

* Mexico annual inflation at 21-year high, more rate hikes seen * Brazil real to keep close to pre-pandemic levels – poll * Chilean peso, Peruvian sol fall (Updates prices; adds comment, details) By Shreyashi Sanyal and Anisha Sircar April 7 (Reuters) – Mexico’s peso rose on Thursday on bets for further interest rate hikes after data showed annual inflation touching multi-decade highs, while other major Latin American currencies dropped against a stronger dollar. The peso firmed 0.5%, an outlier among developing world peers on the day, as data showed Mexican consumer prices rose 7.45% in the year through March, to its highest since early 2001 and double the central bank’s target. The figure suggested more rate hikes by the Mexican central bank were likely and was also above the 7.36% median forecast of analysts surveyed by Reuters. Most emerging market (EM) currencies were lower, with even the MSCI’s index for Latin American units shedding 0.9%. The dollar hit a near two-year high before easing. Resource-rich Latin America has outperformed other markets in recent weeks despite rising geopolitical risks, owing to spikes in commodity prices and monetary tightening cycles, but the rally may be short-lived, analysts said. “Most EMs have been fairly resilient in recent months as solid external positions and proactive interest rate hikes have provided insulation to global events,” said David Rees, senior EM economist at Schroders. “That said, tighter global financial conditions that are a result of US Federal Reserve tightening and weaker risk appetite owing to the situation in Ukraine are likely to have a negative impact on the ability of EM to access external financing and meet outstanding obligations.” Minutes from the Fed’s March meeting on Wednesday showed “many” policymakers were prepared to raise interest rates in 50-basis-point increments in coming months, supporting the greenback. Brazil’s real fell 0.6%, down for the third straight day. A Reuters poll showed the real will keep trading close to its pre-pandemic levels in coming weeks, still riding a wave of positive sentiment that is at odds with worsening economic conditions. Meanwhile, Chile’s President Gabriel Boric announced a $ 3.7 billion economic recovery plan that includes a minimum wage hike and financing for sectors still battling the effects of the pandemic. The Chilean peso shed 0.7%, while the Peruvian sol dropped 0.5%. Stock markets in Latin America were 0.2% lower, while broader EM stocks declined 1.4%. Elsewhere, Pakistan’s central bank raised its policy rate by 250 basis points to 12.25% in an emergency meeting Thursday, the biggest hike in years. Pakistan’s Supreme Court ruled that Prime Minister Imran Khan’s move to dissolve parliament was unconstitutional and ordered lawmakers to return, a decision that could spell the end of his premiership as soon as Friday. Latin American stock indexes and currencies at 1917 GMT: Stock indexes Latest Daily% change MSCI Emerging Markets 1127.07 -1.35 MSCI LatAm 2659.65 -0.13 Brazil Bovespa 118913.25 0.58 Mexico IPC 55442.41 0.01 Chile IPSA 4984.07 0.24 Argentina MerVal 91113.00 0.154 Colombia COLCAP.3 C21616 Daily% change Brazil real 4.7423 -0.59 Mexico peso 20.0745 0.43 Chile peso 805.7 -0.76 Colombia peso 3764.27 -0.46 Peru sol 3.696 0.00 Argentina peso 111.9700 -0.12 (interbank) Argentina peso 193 1.55 (parallel) (Reporting by Shreyashi Sanyal, Anisha Sircar and Devik Jain in Bengaluru; Editing by Andrea Ricci and Grant McCool)

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