By Susan Mathew Oct 29 (Reuters) – Colombia’s peso hit a three-week low ahead of a central bank policy decision on Friday, while in Brazil miner Vale fell after weak results and Petrobras’ profits caught the ire of the president. As the dollar capitalized on the euro’s weakness, most emerging market currencies lost, with sliding commodity prices further hampering assets in resource-rich Latam. Colombia’s peso fell 0.3%. The central bank seen raising its benchmark interest rate by 25 basis points to 2.25%, but the market, and likely the seven-member board, is divided over how sharply policymakers will increase borrowing costs, a Reuters poll showed. An increase would mark the second consecutive month the board has raised the rate. Three board members had backed a half-point rise last time. “Financial conditions in Latin America have tightened sharply this year, most notably in Brazil and Chile, on the back of aggressive monetary tightening and growing political and/or fiscal risks,” Capital Economics said in a note. “With these factors likely to persist, tight financial conditions add to growing headwinds facing recoveries in the region.” Data on Friday showed economic growth in Mexico shrank for the first time since rebounding through the pandemic in the third quarter. In the world’s largest producer of copper, Chile, data showed production of the metal fell 6.9% year on year in September amid some shutdowns in the sector. With oil, iron ore and copper prices also falling, currencies of Mexico and Chile fell 0.5% each, while Brazil’s real slipped 0.4%. On the week, the real flat, while Mexico’s peso looks to be the worst weekly performer in the region, down more than 1%. After Mexican oil firm Pemex reported a move back into loss on Thursday, Brazil’s Petrobras beat quarterly profit expectations. But Brazilian President Jair Bolsonaro said the company is too profitable. Its policy of pricing domestic fuel in line with international rates is drawing ire as Brent crude prices rise. Bolsonaro’s ouster of Petrobras’ former chief executive over the issue had seen shares plunge 21% in February. The country’s economy ministry on Friday said Brazilian states decided to freeze the ICMS tax levied on fuels for 90 days, aiming to keep prices stable. Miner Vale sank 3% after third-quarter net profit came in significantly below analysts’ forecasts, while a 60% sequential drop in quarterly net income pushed steelmaker Usiminas 5.7% lower. losses on Mexico’s IPC stock index were capped by strong earnings from conglomerate Femsa and restaurant operator Alsea sending their shares up 0.4% and 0.2% respectively. Key Latin American stock indexes and currencies at 1414 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1264.08 -0.94 MSCI LatAm 2116.37 -1.53 Brazil Bovespa 104204.42 -1.42 Mexico IPC 51110.20 -0.27 Chile IPSA 4095.68 -0.01 Argentina MerVal – – Colombia COLCAP 1396.29 -0.83 Currencies Latest Daily % change Brazil real 5.6462 -0.38 Mexico peso 20.4709 -0.52 Chile peso 809.8 -0.51 Colombia peso 3787.53 -0.32 Peru sol 3.9739 0.00 Argentina peso 99.7100 -0.02 (interbank) (Reporting by Susan Mathew in Bengaluru; Editing by Alistair Bell)
