Most Latam currencies firm on US price data; Mexico peso slips

SAO PAULO: Latin American currencies mostly firmed on Friday after underlying US inflation remained tame in September, casting doubt over the prospect of a December interest rate hike.

US consumer prices rose 0.1 percent in September excluding volatile food and energy components, data from the Labor Department showed, even as headline inflation came in at the fastest in eight months.

A 13.1 percent surge in gasoline prices due to hurricane-related production disruptions at oil refineries accounted for three-quarters of the increase in the headline figure.

The mixed report comes as Federal Reserve officials have been engaged in a vigorous debate over why inflation remains muted despite shrinking slack in the economy.

"Uncertainty surrounding inflation suggests that a December rate hike is still not a done deal. But we continue to believe it is likely," economists at Nordea wrote in a report.

The currencies of Brazil, Chile and Colombia firmed between 0.1 and 0.4 percent, supported by expectations that a slow path of US rate hikes could bolster demand for high-yielding assets.

The Mexican peso, however, bucked the trend, touching a new five-month low on concerns over the future of Mexico's trade ties with the United States.

The United States on Friday unveiled hotly contested proposals for higher regional autos content in the North American Free Trade Agreement, three people told Reuters, casting further doubt on the chances of reaching a deal to modernize the pact.

Brazil's benchmark Bovespa stock index rose 0.3 percent and hovered around the 77,000 mark, tracking commodity prices higher after stronger-than-expected Chinese trade figures. Shares of producers of basic products such as iron ore miner Vale SA and oil company Petr?leo Brasileiro SA led the rally.

Preferred shares in Oi SA jumped 20 percent, their biggest daily gain in seven months, after the phone company submitted a debt-restructuring plan seen as strongly beneficial to stockholders.

Still, analysts warned the plan may not be approved by creditors, who could be forced to take heavy losses on their holdings.