June 8 (Reuters) - Latin American currencies were mixed against a softer dollar on Thursday, with Mexico's peso easing after data showed slowing inflationary pressures, while an uptick in copper prices supported Chile's peso.
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- Inflation slows in Mexico, Chile
- Colombia CPI falls below market expectations
- Latam FX down 0.1%, stocks down 0.2%
Mexico’s peso was last down 0.4% at 1501 GMT after holding near the unchanged mark earlier in the day, also bogged down by a fall in crude prices.
Data showed the annual inflation rate in Latin America’s second-largest economy slowed in May for a fourth consecutive month to 5.84%, below forecasts of 5.90% and at its lowest since August 2021.
The Bank of Mexico’s decision to halt its nearly two-year-long rate-hiking cycle last month had raised concerns about a setback to the peso, which has enjoyed a rally this year on the back of its interest rate differential with the United States.
However, the central bank has signalled it would likely keep rates elevated for a while. Chile’s peso was muted against the greenback, recouping early declines. Data showed Chile’s annual inflation rate fell to 8.7% in May, dropping well below the 9.9% reported in April.
“We are finally noting some disinflation, but it does not mean necessarily that rate cuts are coming,” said Juan Perez, director of trading at Monex USA. “If a pivot came quickly, it would send a clear message that central bankers feel they’ve made a mistake with contractionary monetary policy and want to not keep hurting the economy.”
A rise in copper prices also supported the currency of the world’s biggest producer of the metal, while the dollar eased after data showing a surge in U.S. weekly jobless claims drove up fears of a recession. The Colombian peso strengthened 1.0%, hovering close to near ten-month highs hit in recent days on expectations that a political scandal would jeopardize the government’s social reform agenda.
Colombia’s consumer prices rose by 0.43% in May, below market expectations, data showed on Wednesday. The Peruvian sol was at a near one-month high, up 0.7% ahead of a local interest rate decision due later in the day in which the country is expected to keep interest rates unchanged.
Markets in Brazil were closed for a holiday. Meanwhile, a sharp selloff in Turkey’s lira slowed on Thursday as traders said it was nearing more “normal” levels ahead of the expected appointment of a new central bank governor. Elsewhere, Pakistan has to satisfy the IMF on three counts before its board reviews whether to release at least some of the $2.5 billion still pending under a lending programme expiring this month, an IMF official said.
