REFILE-EMERGING MARKETS-Latam FX ekes out gains; Chile’s peso jumps before central bank move

(Corrects spelling of Colombian Peso in lede and fourth paragraph) * Brazil retail sales rise 0.1% in May, less than expected * US June consumer price inflation surges to a 40-1/2-year high * Chile central bank likely to hike rates to 9.5% By Anisha Sircar and Devik Jain July 13 (Reuters) – The Colombian peso led Latin American currencies higher on Wednesday as a resurgent dollar rally lost steam, while Chile’s peso climbed from record lows ahead of an expected interest rate hike from the country’s central bank. The Andean country’s central bank is likely to hike the benchmark rate to 9.5% from 9% later in the day, analysts forecast. Commodity-linked Chile’s peso rose 1.2%, after sliding to as low as 1026.40 against the dollar on Tuesday, partially weighed down by sinking copper prices on global recession fears. Crude exporter Colombia’s peso jumped 3.04%, snapping a six-day losing streak. “The sell-offs of COP and CLP pose a real challenge for policymakers trying to contain inflation, and likely put increased pressure on upcoming monetary policy decisions, such as today’s MPC meeting in Chile, where CLP could see more pressure in response to any perceived under-delivery,” Goldman Sachs wrote in a note. “Colombia and Chile each feature very wide current account deficits, few signs that inflation has been tamed even after significant hiking cycles, and COP and CLP would be particularly exposed if commodity prices were to take another leg lower.” Emerging market assets have been rattled in recent weeks as rising interest rates and price pressure sap investor confidence, with Latam markets tumbling from a rally seen earlier this year as commodity prices soften and fears of a recession loom large. Regional currencies found support as the dollar fell 0.2% after galloping to a 20-year high on the heels of data showing US annual consumer price inflation posted the largest increase since 1981 in June, driving up bets of bigger interest rate hikes. Investors are now pricing in a 78.6% chance of a 100 basis point hike by the US Federal Reserve later this month, according to the CME Fedwatch tool. Meanwhile, with momentum decreasing amid persistent inflation, retail sales in Brazil grew 0.1% in May from April, more slowly than expected, data showed. The country’s biggest individual investor, Luiz Barsi, said he is continuing to buy shares in his companies even as uncertainties loom ahead of October’s presidential elections. The real added 0.99% to trade at 5.38 to the dollar, while Mexico’s peso was up 0.86% at 20.67. Key Latin American stock indexes and currencies at 1902 GMT Stock indexes Latest Daily % change MSCI Emerging Markets 971.05 0.39 MSCI LatAm 1978.59 0.71 Brazil Bovespa 98427.07 0.16 Mexico IPC 47675.59 0.05 Chile IPSA 5112.93 0.76 Argentina MerVal 102835.88 -0.1326 -0.1326 Colombia -0.1326 -0.3626 Colombia COLCAP 7715 Latest Daily Currencies % change Brazil real 5.3851 0.99 Mexico peso 20.6721 0.85 Chile peso 1007.9 1.12 Colombia peso 4485.65 3.04 Peru sol 3.9469 0.20 Argentina peso (interbank) 127.8200 -0.18 Argentina peso (parallel) 278 -2.16 (Reporting by Anisha Sircar and Devik Jain in Bengaluru; editing; by Jonathan Oatis and Nick Zieminski)

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