EMERGING MARKETS – Mexican Peso Slides on Pemex Debt Problems; risk assets fall on Fed comments

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Band Shreyashi Sanyal and Susan Mathew

April 21 (Reuters)The Mexican peso hit its lowest level in a month on Thursday after state oil company Pemex came under pressure to repay its debt, while the Peruvian sol tumbled after a state of emergency was declared in a leading copper mine.

More broadly, emerging markets also came under pressure after US Federal Reserve Chairman Jerome Powell confirmed that a half-point interest rate hike in May was “on the table”. This has strained the nerves of investors already worried about slowing growth in China and the fallout from the Russian-Ukrainian war.

“We were all waiting for confirmation that Powell is okay with the 50 basis point rate hike at the next meeting, obviously he gave that impression,” said Mike O’Rourke, chief market strategist at Jonestrading. .

“The one thing investors have confidence in is that the policy tightening is going to be there for the foreseeable future.”

While US stocks fell sharply following Powell’s comments, Latam exchanges also weakened with Chile’s IPSA .SPIPSA down almost 2%, heading for its worst session in a month.

The Mexican peso MXN= slipped 1%, hitting 20.23 against the dollar during the session. Mexico’s inflation forecast could be revised higher at the next meeting due to the impact of the war in Ukraine, the central bank chief said.

Cash-strapped Petroleos Mexicanos must pay about 1 billion euros ($1 billion) to buy back a 2015 bond, two sources with knowledge of the matter told Reuters, despite President Andres Manuel Lopez’s promise Obrador that his government would pay them until 2024.

Pemex has struggled with years of declining crude production and in 2020 lost its coveted investment grade debt rating. The public company’s debt problems have impacted Mexico’s sovereign credit rating over the years.

Meanwhile, the currencies of the world’s major copper producers, Chile and Peru, fell, the latter CLP= sliding 1.2%, after hitting 10-week lows during the session.

Peru has declared a state of emergency near Southern Copper Corp’s SCCO.N Cuajone mine, as protests hit major mines in the Andean nation, halting 20% ​​of national copper production.

The Chilean miner of Antofagasta ANTO.L said first-quarter copper production fell 24% year-on-year, hit by continued drought and lower grades.

Chile’s constitutional assembly is due to begin debating dozens of articles on mining, water and environmental rights on Thursday that could reshape the way the country regulates production of the red metal and minerals like lithium.

Main stock indices and currencies in Latin America at 19:16 GMT:

Stock indices

Latest

% daily change

MSCI Emerging Markets .MSCIEF

1085.23

-0.95

MSCI Latam .MILA00000PUS

2566.22

-0.96

Mexico IPC .MXX

53327.63

-0.94

Chile IPSA .SPIPSA

4877.47

-1.96

Argentina MerVal .MERV

91625.99

-1.008

Colombia COLCAP .COLCAP

1614.16

-1.32

Currencies

Latest

% daily change

mexican peso MXN=D2

20.1953

-1.05

chilean peso CLP=CL

824.9

-1.36

Colombian peso COP=

3770.01

-0.39

Soil of Peru PEN=PE

3.734

-0.56

Argentinian peso (interbank) ARS=RASL

114.0800

-0.10

(Reporting by Shreyashi Sanyal in Bengaluru; Editing by Alexander Smith and Cynthia Osterman)

(([email protected]; +1 646 223 8780; +91 961 144 3740; Twitter: https://twitter.com/s_shreyashi;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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