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EMERGING MARKETS-Colombian peso rallies after rate hike, $9.8 bln IMF credit line

reuters.com · 04/29/2022 15:19
EMERGING MARKETS-Colombian peso rallies after rate hike, $9.8 bln IMF credit line

Colombian central bank hikes by 100 bops to 6%

Capital controls buoy Russian rouble despite rate cut

Mexican economy grows for first time in three quarters

War pushes Ukraine's banking sector into loss in Q1

Updates prices

By Susan Mathew

- Colombia's peso broke a seven-day losing streak on Friday after the central bank hiked interest rates, while Russia's rouble hit a two-year peak against the dollar and euro as capital controls helped it weather yet another rate cut.

After falling 3.5% in its latest losing streak, the Colombian peso COP= rose 0.7%, moving away from over 11-week lows.

Colombia's central bank board raised the benchmark interest rate by an expected 100 basis points to 6% on Friday, the highest in nearly five years, as it continues hikes to stifle persistent inflation pressures. nS0N2RF033

Also aiding sentiment was the International Monetary Fund approving a $9.8 billion Flexible Credit Line for Colombia. But it warned that the country remains vulnerable to external risks including inflationary pressures and a spike in risk premia. nL2N2WR1XX

The Mexican peso MXN= recovered from a six-week low, bolstered by preliminary data showing the country's economy grew in the first quarter from the previous three-month period for the first time in three quarters. The figure, however, was slightly below forecasts. nL2N2WR0XX

"We still expect the recovery of household incomes (in Mexico) to proceed at a relatively slow pace. Elevated domestic uncertainties should also keep on weighing on investment prospects," Citigroup analysts said.

The dollar weakening from 20-year highs also boosted risk appetite. FRX/

Russia's rouble RUB= reached 66.877 against the dollar in the interbank market before trading around 68, while against the euro EURRUB= it was last at 72, after hitting 70 in the session. nL5N2WR43U

The Central Bank of Russia cut its key rate by a larger-than-expected 300 basis points to 14% on Friday, and said it saw room for cutting rates further this year, as it tries to manage a shrinking economy and soaring inflation in the wake of Moscow's military attack on Ukraine. nL5N2WR43UnR4N2VY02R

Russia's finance ministry made what appeared to be a late U-turn to avoid a default, as it made a number of overdue international debt payments in dollars despite previously vowing to pay only in roubles. nL2N2WR0RD

Ukraine's banking system posted a net loss in the first quarter after lenders had to transfer over $730 million of their earnings in local currency to reserves to cover possible future losses linked to the war, the central bank said on Friday. nL5N2WR5SE

Key Latin American stock indexes and currencies at 1850 GMT:

Stock indexes

Latest

Daily % change

MSCI Emerging Markets .MSCIEF

1077.49

2.25

MSCI LatAm .MILA00000PUS

2346.88

0.7

Brazil Bovespa .BVSP

110411.34

0.45

Mexico IPC .MXX

51813.62

-1.52

Chile IPSA .SPIPSA

4793.70

0.02

Argentina MerVal .MERV

89775.37

-0.641

Colombia COLCAP .COLCAP

1583.75

-0.58




Currencies

Latest

Daily % change

Brazil real BRBY

4.9409

-0.03

Mexico peso MXN=D2

20.3527

0.41

Chile peso CLP=CL

849.2

0.91

Colombia peso COP=

3950.95

0.68

Peru sol PEN=PE

3.836

0.10

Argentina peso (interbank) ARS=RASL

115.3100

-0.10


(Reporting by Susan Mathew in Bengaluru; editing by Paul Simao and Richard Chang)

((susan.mathew@thomsonreuters.com;))