EMERGING MARKETS-Mexican peso up on inflation data, Turkey lira higher

* Mexico headline inflation rebounds in early Dec * Latam FX outshines global EM peers for the year * Turkey’s central bank holds interest rate By Shreyashi Sanyal Dec 22 (Reuters) – Mexico’s peso rose on Thursday as data showing a rebound in inflation eased bets of tighter monetary policy ending anytime soon, while the Turkish lira inched up as its central bank left interest rates unchanged. The peso rose 0.4% after a report showed Mexico’s headline inflation climbed in the first half of December after six fortnights of slowing, while the core inflation index finally started to creep down. The reading comes just as the Bank of Mexico (Banxico) raised its key rate for the 13th consecutive time to 10.50% last week, but annual inflation is still far above the central bank’s target of 3%, plus or minus one percentage point. Kimberley Sperrfechter, emerging markets economist at Capital Economics, says the data will allow Banxico to draw its tightening cycle to a close with a final 25 basis-point hike at its next meeting in February, bringing the terminal rate to 10.75%. “But with inflation set to stay above target for a while yet, we think that rate cuts are unlikely before the second half of 2023.” Among other Latin American currencies, Brazil’s real rose 0.6%, while the Chilean peso added 0.7%. Most currencies in central and south America have enjoyed a bounce this year from their heavy exposure to commodities. Prices of oil, base and precious metals have surged for the better part of 2022, pushing the MSCI’s index for Latam FX is up over 16% this year for its first rise in three years. The MSCI’s broader EM currencies index is down 4.7% for the year. In Brazil, Congress late on Wednesday gave its final approval to a constitutional amendment increasing the government spending cap to maintain welfare payouts to poor families next year, a centerpiece campaign pledge by President-elect Luiz Inacio Lula da Silva. Turkey’s central bank, on the other hand, kept interest rates steady at 9% despite soaring inflation. The move fulfilled a pledge to end a brief but sharp easing cycle after President Tayyip Erdogan had called for single-digit rates. The lira edged 0.2% higher. Istanbul stocks rose 0.5% on the day, but has proven to be an unlikely shelter for investors in a year dominated by runaway inflation. Stocks in Turkey have surged over 190% in 2022. Global ratings agency S&P Global cut Pakistan’s long-term sovereign credit rating by one notch to “CCC+” from “B” to reflect a continued weakening of the country’s external, fiscal and economic metrics. Key Latin American stock indexes and currencies at 1527 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 962.51 1 MSCI LatAm 2145.09 0.24 Brazil Bovespa 107537.43 0.1 Mexico IPC 50278.68 -0.29 Chile IPSA 5215.81 -1.02 Argentina MerVal 180496.38 0.35831 Colombia COLCAP Currencies 84.219 1 Latest Daily % change Brazil real 5.1706 0.61 Mexico peso 19.5620 0.41 Chile peso 864.6 0.61 Colombia peso 4749.05 0.34 Peru sol 3.799 -0.33 Argentina peso (interbank) 174.5900 -0.18 Argentina peso (parallel) 323 0.62 (Reporting by Shreyashi Sanyal in Bengaluru; Editing by Lisa Shumaker)

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