* Peru’s cbank holds interest rates steady * Mexico’s industrial output growth below forecasts * Argentina scores record debt swap cutting $30 bln owed near-term * Moody’s reaffirms Colombia BAA2 rating, holds stable outlook * Latam FX up 1.0%, stocks up 1.8% (Updates at 1900 GMT) By Amruta Khandekar and Bansari Mayur Kamdar June 9 (Reuters) – Most Latin American currencies rose on Friday, led by the Brazilian real’s 1% advance, while the Peruvian sol briefly hit an over 14-month high a day after the country kept interest rates unchanged. MSCI’s index of Latin American currencies rose 1.0% by 1900 GMT to its highest since September 2014 – a level hit multiple times this year as the dollar plunged on expectations that the U.S. Federal Reserve would soon halt its rate-hiking cycle. After a jump in U.S. jobless claims fueled bets of a rate hike pause by the Fed next week, investors are awaiting Tuesday’s consumer prices report for more clarity on the interest rate trajectory. “We continue to believe that peak U.S. interest rates are behind us, and that notwithstanding the ongoing choppiness in U.S. rates, the trend is likely to be lower rates from current levels toward year-end,” said Phoenix Kalen, Societe Generale’s global head of emerging markets research. Kalen, however, cautioned risks of a U.S. recession are likely to challenge the outlook for EM currencies. Broadly, foreign investors piling into Asian fixed income and stocks propelled emerging market portfolio inflows to $10.4 billion in May, the Institute of International Finance (IIF) found. The Peruvian sol rose 0.5% against the dollar, after the country’s central bank kept its benchmark interest rate unchanged at 7.75% for the fifth consecutive month. Peru’s central bank expects inflation to converge to its target in 2024, not the end of this year as previously estimated, said the bank’s manager for economic studies Adrian Armas. The Brazilian real hit a one-year high after Thursday’s market holiday, last up 1.1%. It has benefited in recent weeks from easing uncertainty over fiscal policies after the country’s lower house approved a new fiscal framework bill, and as data pointed to robust economic growth. Nevertheless, a new poll showed Brazilian President Luiz Inacio Lula da Silva’s approval ratings are slipping steadily. The Colombian peso slipped 0.4% against the dollar, reversing early gains. It remains on track for a 3.7% rise this week, boosted by expectations that a political scandal would jeopardize the government’s social reform agenda. Ratings agency Moody’s reaffirmed its BAA2 rating for Colombia and held its outlook as stable. Mexico’s peso gained 0.7%, sticking to seven-year highs hit recently as the currency continues to benefit from its interest rate differential with the United States. Data showed Mexican industrial output was 0.7% higher year-over-year in April, below market forecasts for 1.3% growth. Argentina has completed its largest ever domestic debt management operation, officials said, lowering near-term obligations by $30 billion over the next four months and pushing off payments beyond national elections later this year. Stocks in Latin America advanced 1.8%, heading for their best week in two months. Elsewhere, Pakistan will target a budget deficit of 6.54% of economic output in the fiscal year starting on July 1, the finance minister said, in a budget closely watched by the IMF. Key Latin American stock indexes and currencies: Stock Latest Daily % change indexes MSCI Emerging Markets 1002.80 0.88 MSCI LatAm 2435.88 1.81 Brazil Bovespa 116766.10 1.11 Mexico IPC 54563.44 0.41 Chile IPSA 5681.96 0.16 Argentina MerVal 379256.14 -0.434 Colombia COLCAP 1180.93 -0.83 Currencies Latest Daily % change Brazil real 4.8710 1.07 Mexico peso 17.2701 0.55 Chile peso 788.2 -0.16 Colombia peso 4188 -0.36 Peru sol 3.6475 -0.20 Argentina peso 244.9500 -0.20 (interbank) Argentina peso 478 1.26 (parallel) (Reporting by Amruta Khandekar, Bansari Mayur Kamdar and Siddarth S; Editing by Richard Chang and Marguerita Choy)
