EMERGING MARKETS-Mexican peso, Brazilian real rise on rate hike bets as dollar strengthens

* Brazil inflation hits highest for April in 26 years * Mexico’s Banxico policy statement due Thursday 1800 GMT * Turkey’s C/A seen recording deficit of $38.35 bln in 2022 By Anisha Sircar May 11 (Reuters) – Latin American currencies gained on Wednesday, with Mexico’s peso jumping ahead of a central bank decision on Thursday, while Brazil’s real rose after a high inflation reading lifted bets of even more policy tightening. The real firmed 0.3% after data showed inflation slowed in April but posted the steepest rise for the month in 26 years. Inflationary pressures have led the central bank to signal another rate hike in June, after already raising rates to 12.75% from a 2% record low in March last year. Mexico’s peso gained 0.6% ahead of a monetary policy meeting by Banxico on Thursday where the central bank is seen hiking its benchmark interest rate for the eighth consecutive time. Central banks in emerging markets have raised rates significantly and in Latin American economies, policy has now reached restrictive territory and should help to moderate demand, Morgan Stanley researchers wrote in a note. “Within Latin America, Mexico’s peso should be a relative outperformer, supported by decent growth in the U.S. and an outperformance of oil versus base metals,” the researchers added. Oil prices jumped almost 5%, buoyed by supply concerns as flows of Russian gas to Europe fell by a quarter. Chile’s peso jumped 0.9%, tracking stronger copper prices as slowing COVID-19 infections in top metals consumer China eased near-term demand concerns. MSCI’s index of Latam currencies firmed 0.7%, snapping four straight days in the red, even as the dollar strengthened to 104.13, just below its two-decade high hit on Monday. On Wednesday, U.S. economic data showed inflation was unlikely to cause the Federal Reserve to adjust their aggressive path of monetary policy tightening. Elsewhere, Turkey’s lira slipped for a fifth straight day, down 0.3% and headed toward lows not seen since its currency crisis in December last year. “In recent days we’ve seen a more measured exchange rate dynamic than in November and December last year, but we cannot dismiss the scenario that USDTRY is now at the foot of a hill, roughly as it was at the beginning of November, and the situation could develop rapidly thereafter,” said Alex Kuptsikevich, a senior financial analyst at FxPro. The country’s current account is expected to end the year with a deficit of $38.35 billion, a Reuters poll showed, as soaring energy prices widen the shortfall. Key Latin American stock indexes and currencies at 1500 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1013.34 0.61 MSCI LatAm 2213.18 2.5 Brazil Bovespa 105216.96 2.04 Mexico IPC 49353.46 0.48 Chile IPSA 4752.63 1.18 Argentina MerVal 85248.08 1.878 Colombia COLCAP 1522.35 0.7 Currencies Latest Daily % change Brazil real 5.1144 0.37 Mexico peso 20.2693 0.57 Chile peso 858.9 0.81 Colombia peso 4072.96 -0.05 Peru sol 3.777 0.21 Argentina peso 117.0800 -0.12 (interbank) Argentina peso 201 0.50 (parallel) (Reporting by Anisha Sircar in Bengaluru; Editing by Angus MacSwan)