EMERGING MARKETS-Latam FX falls as dollar gains on inflation data; rouble steadies

* US CPI spikes in February * BIS suspends Russia central bank * Most EMs and Latam stocks, currencies dip By Anisha Sircar and Shreyashi Sanyal March 10 (Reuters) – Latin American currencies fell against a firming dollar on Thursday as red-hot US inflation data raised bets for an interest rate hike by the Federal Reserve, while risk appetite spurred by talks between Russia and Ukraine faded from earlier. Currencies across south and central America, including Brazil’s real, Colombia’s peso and the Mexican peso fell between 0.2% and 0.7%, while the MSCI’s gauge for Latam currencies dropped 0.7%. Data on Thursday showed US consumer prices surged in February, culminating in the largest annual increase in 40 years, supporting the dollar, which was last up 0.4%. Ukrainian Foreign Minister Dmytro Kuleba tempered expectations for a ceasefire agreement or other results from a meeting with Russian counterpart Sergei Lavrov, dashing any hopes from earlier in the session of a diplomatic resolution to the conflict between the two nations. Russia’s rouble traded between the range of 115 to 121 to the dollar in Moscow, but has erased about 50% of its value since Moscow sent troops into Ukraine two weeks ago. The Bank for International Settlements suspended Russia as a result of sanctions. Many companies have stopped handling Russian goods, creating a supply squeeze and price rallies across commodities. The Kremlin said that Russia’s economy was experiencing a shock and an “absolutely unprecedented” economic war. “The overall picture is unlikely to change before the conflict comes to an end, but (the suspension) will undoubtedly translate into more pressure on Russian assets, particularly the battered rouble,” said Wilson Ferrarezi, an economist at TS Lombard. “Overall price action remains very volatile, with a lot of profit-taking – and every sign that might seem like progress between Ukraine and Russia will cause some relief in markets.” Even as prices of raw materials soar to multi-year highs, which is set to benefit several resource-rich Latin American commodity exporters, currencies in the region could begin to wilt in the weeks to come. Analysts have warned with no immediate end in sight to the war in Ukraine and as the United States begins its monetary tightening cycle, currencies in Latin America could start to feel some pressure. Data from Brazil showed that the country’s retail sales grew the most for the month of January since 2019, beating market expectations despite challenges for a sector that has not yet fully recovered from the pandemic. Key Latin American stock indexes and currencies at 1531 GMT: Stock indexes Latest Daily% change MSCI Emerging Markets 1103.22 01.15 MSCI LatAm 2414.68 -1.25 Brazil Bovespa 112570.14 -1.17 Mexico IPC 53911.25 0 Chile IPSA 4670.02 0.3 Argentina Merval 88990.48 2022 Colombia COLCAP 1541.78 00:28 Currencies Latest Daily % change Brazil real 5.0535 -0.83 Mexico peso 20.9403 -0.23 Chile peso 805 -0.14 Colombia peso 3780.01 -1.08 Peru sol 3.723 0.05 Argentina peso (interbank) 108.7800 -0.07 Argentina peso (parallel) 199.5 2.51 (Reporting by Anisha Sircar in Bengaluru, Editing by William Maclean)

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