* MSCI Latam FX index set for weekly gains of 0.9%
* Putin hints progress in talks with Ukraine
* Brazil inflation hits 7-year high in Feb
By Shreyashi Sanyal and Anisha Sircar
March 11 (Reuters) - Exporter-heavy Latin American
currencies notched a second week of gains on Friday as prices of
commodities surged in response to heavy Western sanctions
imposed on Russia over its invasion of Ukraine.
Risk appetite also got a boost after Russian President
Vladimir Putin hinted at some progress in Moscow's talks with
Ukraine, although he provided no details. The news arrived amid
fears of rising global inflationary pressures and the fallout on
the global economy from Russia's invasion of Ukraine.
"Putin's Ukraine comment is giving a lift to risk, but the
market really remains in wait-and-see mode... until we see a
genuine diplomatic breakthrough from both sides, the market is
going to take everything with a grain of salt," said Boris
Schlossberg, managing director of FX strategy at BK Asset
Management.
Latin American assets have been favored by investors, even
as the war continues, for their heavy exports of metals, oil and
other raw material, prices of which have hit multi-year highs
this week.
The MSCI's index for Latam currencies rose
0.3%, adding up to weekly gains of 0.9% for the week. Brazil's
real traded between 4.98 to 5 against the dollar
and was set for weekly gains of 0.6%.
"Markets are really coming to the conclusion that Brazil is
going to be the absolute prime beneficiary of all of this global
turmoil because it is such a massive producer of commodities,"
Schlossberg said, also warning that a higher-than-expected
interest rate hike by the U.S. Federal Reserve could hurt
emerging market currencies.
The Fed is expected to raise its benchmark lending rate by
25 basis points to the range of 0.00% to 0.25% at the end of its
policy meeting next week. Recent data also showed U.S. inflation
hitting a four-decade high, lending more weight to the need for
monetary policy tightening.
Inflation in Brazil rose more than expected in February to a
seven-year high, highlighting broad upward pressure that is
expected to intensify because of the commodity prices surge
sparked by the war.
The Mexican peso added 0.2% after data showed Mexican
industrial output unexpectedly posted its fourth consecutive
monthly increase in January.
Several emerging markets will hold central bank meetings
next week. Turkey, faced with inflation above 50%, and Brazil,
which has already seen benchmark rates lifted by nearly 10
percentage points over the past year, are scheduled to meet on
Thursday.
Indonesia, too, sets rates Thursday, while Russia's central
bank, having more than doubled the key rate to 20% following the
Ukraine invasion, meets on Friday.
Separately, Chilean leftist Gabriel Boric was sworn in to
office as president in a sharp political shift for Chile since
its return to democracy three decades ago after the dictatorship
of General Augusto Pinochet.
Key Latin American stock indexes and currencies at 1508 GMT:
Stock indexes Latest Daily %
change
MSCI Emerging Markets 1088.54 -1.29
MSCI LatAm 2431.54 0.42
Brazil Bovespa 113981.04 0.28
Mexico IPC 53629.97 0.45
Chile IPSA 4649.22 0.87
Argentina MerVal 90091.32 -0.212
Colombia COLCAP 1546.42 0.2
Currencies Latest Daily %
change
Brazil real 5.0310 -0.30
Mexico peso 20.9038 0.10
Chile peso 802.3 -0.17
Colombia peso 3831 -0.34
Peru sol 3.683 0.71
Argentina peso (interbank) 108.8800 -0.09
Argentina peso (parallel) 198 2.53
(Reporting by Shreyashi Sanyal and Anisha Sircar in Bengaluru
Editing by Raissa Kasolowsky)