EMERGING MARKETS – Latham Stocks, FX Outperform Emerging Markets Competitors

* Chile’s central bank to keep interest rate at 11.25% this week – poll * Brazil, Argentina to discuss common currency * Peru arrests 200 in Lima as anti-government protests erupt * Latam currencies up 0.3%; shares add 0.8% (Updates prices, adds comment) By Bansari Mayur Kamdar and Amruta Khandekar Jan 23 (Reuters) – Latin American assets outperformed their emerging market peers on Monday, supported by firm commodity prices, while leaders Brazil and Argentina published an article stating their goal of greater economic integration, including a common South American currency. MSCI’s index of Latin American currencies rose 0.3 percent by 1945 GMT, while broader emerging market (EM) currencies were flat. Regional shares added 0.8%, with Argentina’s Merval index leading Latin American peers. Latham stocks have outperformed the region’s currencies since the start of 2023 after lagging for three straight years. “While there is some evidence of improvement in underlying fundamentals, be it trade regionalization in favor of Mexico or buoyant commodity markets in favor of Brazil, these markets remain dynamic and uncertain,” said Charles Sunnucks, emerging markets analyst at Oldfield Partners. Brazil’s Bovespa pared some of its early gains as losses in banking stocks offset gains in energy and materials stocks. The Brazilian real rose 0.2% against the dollar. Brazil and Argentina are seeking greater economic integration, including the development of a common currency, Brazilian President Luiz Inacio Lula da Silva and Argentine leader Alberto Fernandez said in a joint paper they wrote. The peso of top copper producer Chile added 0.6 percent, tracking firm prices for the red metal on an improving demand outlook in top consumer China. Chile’s central bank is expected to keep the benchmark interest rate at 11.25% at its January meeting later this week, a Reuters poll of traders showed, ahead of a cycle of easing that will push rates to 6.5% within 12 months. Peru’s salt fell 0.8 percent to its lowest level in more than a month. Deadly anti-government protests continued to spread across the country, with Peruvian police arresting more than 200 people accused of illegally entering the campus of a major university in Lima. Inflation in Peru is likely to end January at between 8.8% and 8.9% year-on-year, the country’s economy minister said on Monday, as protests and road blockades push up food prices. “Political unrest remains a headwind but should be tempered by a more favorable global backdrop in the form of a stable to weaker US dollar and the reopening of China,” said Alejo Chervonko, chief investment officer, emerging markets Americas at UBS Global Wealth Management in a note. As crude prices advanced, oil exporter Mexico’s peso gained 0.3 percent, while the Colombian peso rose 1.2 percent against the dollar to hit above a three-month high. Colombia’s crude oil production in November 2022 rose 3.1% from the same month a year earlier, the government said on Monday. Mexico’s core inflation is forecast to remain steady in the first half of January, while core inflation is slowing, a Reuters poll showed on Monday. Inflation data is expected to be released on Tuesday. Key Latin American Indices and Currencies at 1945 GMT: Stock Indices Latest Daily % Change MSCI Flat Markets 1039.04 0.27 MSCI LATAM 2291.61 0.79 Brazil Bovespa 112179.17 0.12 Mexico IPC 54623.62 1.25 % Change Brazilian Real 5,1980 0.19 Mexican Peso 18, 8149 0.21 Chilean Peso 812.9 0.57 Colombian Peso 4540 1.10 Peruvian Sol 3.8733 -0.79 Argentine Peso 184.3600 -0.49 (Interbank) Argentine Peso 372 1.08 (Parallel) (Reporting by Benga Kluur Kamrude Mayarari in Banga Editing by Jan Harvey and Tomasz Janowski)

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