EMERGING MARKETS-Latam assets subdued after bruising selloff, Peru’s sol rises

By Shreyashi Sanyal June 14 (Reuters) – Most Latin American stocks and currencies were muted on Tuesday after starting the week hit by concerns of rising inflation and slowing global growth, while Peru’s sol rose eying the restart of Las Bambas copper mine after a shutdown. Emerging market assets along with other riskier assets were trading in a narrow range for most part of the day as investors now price in a larger-than-expected three-quarter-percentage point interest rate increase by the US Federal Reserve on Wednesday. In the face of surging global inflationary pressures and fresh COVID restrictions in China, investors have become increasingly risk averse. Latin American stocks hit near one-month lows on Monday, while currencies plumbed four-week lows. Both indexes struggled for direction on Tuesday. Brazil’s real shed 0.2%, staying near one-month lows. Brazil’s Economy Minister Paulo Guedes said tax reductions supported by the government allow prices not to be adjusted immediately, denying he had asked prices to be frozen while the country faces persistent inflation and President Jair Bolsonaro seeks re-election. Analysts at Credit Suisse expect still high inflation in Brazil to spread across item categories for the remainder of 2022, namely to food and fuel prices. Worries about rising food inflation and shortages have also affected sentiment in the developing world space. Mexico’s peso lost 0.9%, while the Chilean peso shed 0.7%. Chile-based LATAM Airlines Group SA, the largest air transport group in Latin America, tumbled more than 5% after it asked a bankruptcy judge to approve $ 2.75 billion in new loans to fund the company’s exit from Chapter 11. The Peruvian sol, however, outperformed its Latin American peers, rising to 3.73 to the dollar at one point during the day as it rebounded from one-month lows hit in the previous session. Investors awaited start of a 30-day truce from Wednesday after a group of indigenous Peruvian communities agreed last week to temporarily lift a protest against MMG Ltd’s Las Bambas copper mine that forced the company to halt operations for more than 50 days, the longest in the mine’s history. Separately, indigenous groups in Ecuador on Monday started what they said would be an indefinite protest against the economic policies of conservative President Guillermo Lasso. A Reuters poll of analysts showed Argentina’s monthly inflation rate is expected to clock in at 5.2% in May, still painfully high but slower than the two previous months. The peso fell 0.2%. Key Latin American stock indexes and currencies at 1516 GMT: Stock indexes Latest Daily% change MSCI Emerging Markets 1016.89 0.04 MSCI LatAm 2134.68 -0.45 Brazil Bovespa 102090.61 -0.49 Mexico IPC 48378.31 -0.14 Chile IPSA 5134.66 0.05 Argentina MerVal 878179 147 Colombia Currencies Latest Daily% change Brazil real 5.1211 -0.20 Mexico peso 20.6823 -1.10 Chile peso 869.5 -0.82 Colombia peso 3989.6 -0.70 Peru sol 3.7335 0.09 Argentina peso (interbank) 122.4700 -0.13 Argentina peso (parallel) 217 ​​-0.46 (Reporting by Sh in Bengaluru Editing by Alistair Bell)

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