©Reuters. Illustrative file image of Mexican peso bills taken on August 3, 2017. REUTERS/Edgard Garrido/Illustration/File
By Froilan Romero
SANTIAGO, April 21 (Reuters) – Latin American currencies and stock markets closed lower on Thursday, after US Federal Reserve Chairman Jerome Powell hinted that the US central bank would act aggressively to curb runaway inflation.
* A half-point interest rate hike will be “on the table” when the Fed meets on May 3-4, in what is expected to be a series of cost-of-credit hikes this year, he said on Thursday. Powell, in comments that pointed to an aggressive set of central bank actions.
* With inflation roughly triple the Fed’s 2% target, “it’s appropriate to move a little faster,” Powell said in a discussion of the global economy at International Monetary Fund meetings.
* Powell’s words also lifted the dollar, whose index, which measures the greenback against a basket of six major currencies, reversed slight losses and gained about 0.27%.
* He gave gains and was trading at 20.1711 per dollar at the close, with a loss of 0.94%, compared to the previous close, with one of the worst performances of the currencies in the region after Powell’s comments.
* The main stock index, which includes the 35 most liquid companies in the Mexican market, also reversed its gains and closed the day with a decline of 1.05%, at 53,267.31 units.
* In Argentina, the peso fell 0.11%, to 114.08/114.09 per dollar in depreciation regulated by the central bank, while the stock index lost 1.15%, to 91,496.13 units, in the midst of political uncertainty within the ruling coalition, which is deepened by a break in the official bloc of the National Senate.
* For Argentina “the great risk is inflation,” warned the head of the International Monetary Fund, Kristalina Georgieva, a few weeks after the agency closed a debt refinancing with the country for some 44,000 million dollars.
* The Chilean peso depreciated 0.97%, to 822.20/822.50 units per dollar. Meanwhile, the leading index of the Santiago Stock Exchange, the IPSA, fell 1.26% to 4,911.90 points.
* “The markets have had a hard time raising their heads after the cut in growth forecasts by the World Bank and ratified by the IMF, to which is added the constant concern about the escalation of world inflation and the consequences of the war between Russia and Ukraine,” one trader said.
* The Colombian peso erased initial gains and closed with a fall of 0.39% to 3,774 units per dollar, in its fourth session down, while the stock index MSCI COLCAP of the stock market ended with a decrease of 0.15 % to 1,616.87 points.
* The Peruvian currency, the sol, lost 0.59%, to 3.734/3.737 units per dollar. Meanwhile, the reference of the Lima Stock Exchange yielded 0.65%, to 617.97 units.
* Brazilian markets remained closed on Thursday.
(Reporting by Froilán Romero. Additional reporting by Nelson Bocanegra in Bogotá, Jorge Otaola and Walter Bianchi in Buenos Aires and Vicente Valdivia)