EMERGING MARKETS-Currencies firm as dollar slips ahead of Fed’s policy decision

* Brazilian industrial production rises in March * Colombian presidential front-runner cancels events * Peruvian mine protesters refuse to talk unless emergency lifted (Adds comments, updates prices throughout) By Susan Mathew and Shreyashi Sanyal May 3 (Reuters) – Emerging market currencies rose on Tuesday, with South Africa’s rand and Brazil’s real jumping over 2% each as the dollar slid ahead of the U.S. Federal Reserve’s policy move, with investors looking for clues on future interest rate hikes. The Fed is expected to raise rates by 50 basis points on Wednesday, and markets are pricing in an aggressive run of hikes as it tries to tame soaring inflation. Riskier currencies tend to take a hit when U.S. rates go up as it takes some of the shine off their carry trade appeal, while growing uncertainty about slowing economic growth in China have only added to the list of worries. “The emerging world is in trouble,” said Jesse Rogers, assistant director – economist at Moody’s Analytics, adding that higher commodity prices, which seemed like a good thing for most emerging economies just one month ago, are biting back through higher inflation.” “Tack the troubles in China and the corrosive effects of the Russian invasion of Ukraine onto business sentiment and investment, and the picture is for choppy waters.” But as the dollar slid on Tuesday, South Africa’s rand jumped from its lowest this year, while Mexico’s peso rose 1%. On Monday, Mexican national oil company Pemex reported a $6.17 billion first quarter net profit, reversing a nearly $2 billion loss in the year-ago period, driven by foreign exchange gains, growing output and higher crude prices. Total financial debt at Pemex, one of the world’s most indebted oil companies, edged down to $108.1 billion from $109 billion at the end of 2021. Brazil’s real recovered from six-week lows to 4.95 per dollar. Data on Tuesday showed industrial production in Brazil rose in March, but ended the first quarter with a negative print, highlighting the challenges for the sector amid problems in global supply chains and a domestic backdrop marked by high interest rates and inflation. As oil prices dropped, Colombia’s peso fell 0.5%. The country’s central bank raised its inflation forecast for 2022 to 7.1% from 4.3% on Tuesday. Meanwhile, Colombian presidential election campaign heated up with Gustavo Petro, the leftist front-runner, canceling events in the country’s coffee region on Monday because of what his office said was a plot by a crime gang to attempt to take his life. Peru’s sol edged 0.3% higher. Indigenous communities in the country occupying a key copper mine said they would agree to talks to end protests only if the government lifts its emergency order for the region. Key Latin American stock indexes and currencies at 1905 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1070.90 -0.15 MSCI LatAm 2292.70 0.55 Brazil Bovespa 106259.17 -0.36 Mexico IPC 51136.14 -1.45 Chile IPSA 4774.64 0.31 Argentina MerVal 89239.00 1.862 Colombia COLCAP 1595.84 0.83 Currencies Latest Daily % change Brazil real 4.9632 2.16 Mexico peso 20.2766 0.91 Chile peso 855.5 0.53 Colombia peso 4022.95 -0.50 Peru sol 3.816 0.42 Argentina peso (interbank) 115.8700 -0.11 Argentina peso (parallel) 200.5 0.25 (Reporting by Susan Mathew and Shreyashi Sanyal in Bengaluru Editing by Mark Potter and Marguerita Choy)

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