* Peruvian sol top weekly performer; Chile's peso top loser
* MSCI FX index snap six-week winning streak
* Mexican, Chilean, Peruvian c.banks leave rates unchanged
By Shashank Nayar
May 14 (Reuters) - Most Latin American currencies gained on
Friday as the dollar calmed and Treasury yields fell after
Federal Reserve officials eased fears about monetary tightening,
while the Peruvian sol headed for its best week in two decades.
MSCI's index of Latin American currencies
gained 0.3% but was set to snap a six-week winning streak, while
stocks rose 1.5%, also set to drop for the week.
Major emerging market assets came under pressure earlier in
the week after data showed U.S. inflation in April gained the
most in nearly 12 years, stirring worries about tighter monetary
policy.
However, inflationary concerns eased after Federal Reserve
Governor Christopher Waller said on Thursday the central bank
would not raise rates until it sees inflation above target for a
long time, or excessively high inflation.
"There will be data disappointments along the way as the
economy comes off the initial burst of fiscal support," said
Mazen Issa, senior FX strategist at TD Securities.
"This is not a cause for major concern but as this week's
U.S. CPI report suggested, the market sometimes unnecessarily
panics even if the factors driving it are known to be
transitory," added Issa.
The currency of Latin America's largest economy, Brazil
, was up 0.9% on a weaker dollar, but falling
iron-ore prices, the country's top export, inflicted record
weekly losses of nearly 0.4% on the real.
However, the real received support this week after major big
international banks raised their forecasts for Brazilian
economic growth this year, after economic activity for March
suggested the economy expanded in the first quarter.
Most other Latin American currencies including the Mexican
peso and Chilean peso gained, while the Peruvian
sol slipped after each of their respective central banks
left benchmark interest rates unchanged to help support
economies battered by the coronavirus pandemic.
The monetary policy committee of Chile's central bank voted
unanimously on Thursday to keep its benchmark interest rate
unchanged at 0.5%, while Peru's central bank maintained interest
rates at 0.25%.
Mexico's peso gained 1% and was set to gain for the
second consecutive week as oil prices jumped and recorded a
third straight week of gains.
Colombia's peso gained 1.1%, also supported by the
surge in crude prices, and was set to record its best week since
the beginning of this year even as social protests rise against
a withdrawn government tax bill.
The Peruvian sol was poised to be the best performing
currency this week, while the currency of the world's top copper
producer Chile looked like the top weekly loser as copper
prices were on course for their first weekly decline since the
start of April, driven by a dip in demand from China.
The dollar index dropped 0.5% while Treasury yields
slid four basis points to 1.628%.
Key Latin American stock indexes and currencies:
Stock Latest Daily
indexes %
change
MSCI 1306.8 1.08
Emerging
Markets
MSCI LatA 2498.3 1.48
m 7
<.MILA000
00PUS>
Brazil 121845 0.94
Bovespa
Mexico 49320. 1.01
IPC 8
Chile 4506.9 1.42
IPSA 3
Argentina 52625. 0
MerVal 9
Colombia 1276.8 1.15
COLCAP 3
Currencie Latest Daily
s %
change
Brazil 5.2671 0.79
real
Mexico 19.845 0.4
peso
Chile 703.7 0.52
peso
Colombia 3676.4 1.13
peso 8
Peru sol 3.6687 -0.3
Argentina 94.04 -0.02
peso
(interban
k)
<ARS=RASL
>
(Reporting by Shashank Nayar in Bengaluru
Editing by Mark Heinrich)