EMERGING MARKETS-Latam currencies weaker on U.S. data; Argentina debt plan eyed
SAO PAULO, June 17 (Reuters) - Latin American currencies weakened on Tuesday after U.S. inflation data bolstered the outlook for higher interest rates in the world's largest economy, though trading volume was low in Brazil due to a shortened session. The MSCI Latin American stock index sank for the fourth straight day, weighed down by concerns over escalating violence in Iraq. Data on Tuesday showed U.S. consumer prices recorded their largest increase in more than a year in May. The data comes ahead of the U.S. Federal Reserve's next policy decision, scheduled for Wednesday. "It's not that the market is expecting the Fed to announce anything tomorrow, but they could note that the economy accelerated or that there is inflationary pressure, which ups the chances that a rate hike will be bigger or come sooner than expected," said Paulo Celso Nepomuceno of Sao Paulo brokerage Coinvalores. Every major currency weakened against the dollar, with Brazil's real dropping the most in over two weeks and the Chilean peso sinking its most in nearly a month. Brazil's currency market will close at 1 p.m. (1600 GMT) while the Bovespa stock exchange will cease trading at 1:30 p.m. as Brazilians prepare to watch the national soccer team play Mexico in a 4 p.m. World Cup match. Argentine stocks and bonds continued to fall a day after the U.S. Supreme Court left intact lower court rulings that ordered Argentina to pay holdout creditors. These creditors declined to accept the government's settlement after a 2001 default. Argentina warned the U.S. decisions could lead to a default on its exising sovereign debt. Economy Minister Axel Kicillof will announce later on Tuesday what Argentina plans to do in response to the ruling. "The most logical reaction is to reiterate their willingness to pay," wrote Siobhan Morden, head of Latin America strategy at Jefferies, in a client note. "The delay tactics may expire if the stay of execution is not extended for a re-hearing request and it already looks like both parties recognize that the legal process is over." The black market Argentine peso fell to its weakest since early February, while the Merval stock index dropped to its lowest level in a month. Argentina's U.S. dollar-denominated 2017 Global bond fell nearly 6 points to 82.79 bid with the yield rising to 16.33 percent, according to Thomson Reuters data. The U.S. dollar-denominated 2033 Discount bond fell 2.26 points to bid 73 and yield 12.35 percent. Key Latin American stock indexes and currencies at 1521 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 1042,42 -0,37 4,35 MSCI LatAm 3342,16 -1,43 5,93 Brazil Bovespa 54223,28 -0,74 5,27 Mexico IPC 42568,67 -0,06 -0,37 Chile IPSA 3829,56 -0,3 3,52 Chile IGPA 18741,6 -0,29 2,82 Argentina MerVal 7146,29 -1,22 32,56 Colombia IGBC 14242,06 -1,09 8,96 Peru IGRA 16255,88 0,01 3,19 Venezuela IBC 2154,4 #N/A -21,27 Currencies daily % YTD % change change Latest Brazil real 2,2565 -0,86 4,44 Mexico peso 13,1057 -0,48 -0,58 Chile peso 559,2 -0,72 -5,92 Colombia peso 1897,65 -0,46 1,81 Peru sol 2,803 -0,36 -0,36 Argentina peso (interbank) 8,1300 0,00 -20,14 Argentina peso (parallel) 12,35 -2,83 -19,03 (Reporting by Asher Levine and Bruno Federowski; editing by Andrew Hay)
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