* Mexico's cenbank holds interest rates
* Colombian Congress approves raising 2023 budget
* FX flat, stocks down 0.4%
By Siddarth S and Bansari Mayur Kamdar
June 23 (Reuters) - Latin American currencies were
subdued on Friday against a firm dollar but on track for their
fifth week of gains, while Colombia's peso lagged regional peers
and snapped a three-day winning streak as crude prices dipped.
MSCI's Latam currencies index was flat at
1830 GMT as the dollar rallied 0.5%.
The U.S. currency rose after data showed U.S. business
activity growth slowed in June but services kept humming along
and as the safe haven dollar drew support from a bout of risk
aversion driven by hawkish comments from global central banks.
Fed Chair Jerome Powell said on Thursday the central bank
would move interest rates at a "careful pace," with most
policymakers seeing at least two more quarter-point rate
increases by the end of 2023.
Oil-producer Colombia's currency lagged regional
peers, falling 2.1% against the greenback.
"With oil prices trending lower over the last few weeks the
drop in crude is starting to catch up with the peso," said
Brendan McKenna, international economist and FX strategist at
Wells Fargo.
"Also, COP may be entering overbought territory, so some of
today's correction may be technically driven."
The country's Congress approved raising the government's
2023 budget by some 16.9 trillion pesos ($4.1 billion) in
overnight votes on Friday, with education and health to receive
the biggest boosts.
Mexico's peso edged 0.2% up against the dollar after
the Bank of Mexico maintained its benchmark interest at 11.25%
on Thursday for the second time, signaling it will hold the rate
"for an extended period."
The rate pause was in line with analysts' forecasts and came
as data shows annual inflation at its lowest in more than two
years.
"The beginning of the rate cutting cycle towards the end of
the year seems likely," said Esther Reichelt, FX strategist at
Commerzbank AG.
"We continue to see MXN trading on strong levels given the
attractive real interest rate outlook," Reichelt added.
Chile's peso slipped 0.2% versus the dollar as a fall
in prices of copper hurt the currency of the world's biggest
producer of the red metal..
Brazil's real eased 0.2% against the dollar.
Argentine Interior Minister Eduardo 'Wado' de Pedro, an ally
of powerful Vice President Cristina Fernandez de Kirchner,
announced on Thursday he will run for the ruling Peronist bloc's
presidential nomination in August primaries.
Elsewhere, Zambia has struck a deal to restructure $6.3
billion in debt owed to governments abroad including China, in a
breakthrough for indebted nations around the world that have
faced lengthy negotiations with creditors.
"The proposed agreement is a major step both for Zambia
which has been waiting to restructure for about two years, but
as a potential model for other countries in debt distress," said
Rachel Ziemba, founder of Ziemba Insights.
Key Latin American stock indexes and currencies:
Stock indexes Latest Daily %
change
MSCI Emerging Markets 991.22 -0.99
MSCI LatAm 2454.69 -0.58
Brazil Bovespa 118940.79 0.01
Mexico IPC 53380.39 -0.34
Chile IPSA 5694.26 -1.2
Argentina MerVal 423701.68 2.051
Colombia COLCAP 1140.52 -0.1
Currencies Latest Daily %
change
Brazil real 4.7789 -0.16
Mexico peso 17.1513 0.08
Chile peso 806 -0.22
Colombia peso 4169.82 -1.61
Peru sol 3.6307 -0.43
Argentina peso 253.0000 -0.16
(interbank)
Argentina peso 490 0.61
(parallel)
(Reporting by Siddarth S and Bansari Mayur Kamdar in Bengaluru;
Editing by Alexander Smith and Angus MacSwan)
