Latin American currencies strengthened on Friday as rising commodity prices suggested more dollars from exports may flow into the region, but stocks finished lower after bad economic data curbed any optimism. The MSCI stock index for Latin America fell 0.82 percent in its third consecutive session of losses, after data showing the US unemployment rate rose to its highest in 25 years hinted at a long recession ahead.
The bank reduced its 2009 growth forecast for 16 emerging economies it tracks to 1.2 percent from 2.2 percent. Mexicos benchmark IPC stock index led regional losses, sliding 1.85 percent, as investors see the countrys economy more linked to the fate of its neighbouring United States. Shares of Mexican cement maker Cemex were the largest drag on the IPC index, as they slid 5.4 percent on doubts on whether the company will be able to sell $500 million in bonds it needs to meet pressing debt payments.
Brazils Bovespa index came next, with losses of 0.71 percent, while Chiles blue chip IPSA index dropped 0.96 percent. Brazils markets were also pressured, by disappointing activity data. Industrial output climbed only 2.3 percent in January from December, much below expectations of an 8.3 percent increase.
The reading followed a 12.7 percent month-on-month plunge in December that was the steepest on record. Compared to the January of 2008, Brazils industrial production tumbled 17.2 percent. The data led some analysts to forecast Brazils central bank will cut interest rates more aggressively next week. The bank has already reduced the Selic by 100 basis points to 12.75 percent in January.
The Chilean peso strengthened 0.79 percent to 607.20 per dollar as the price of copper, the countrys main export, surged nearly 10 percent this week on expectations of higher demand from China. Mexicos peso firmed 0.76 percent to 15.2300 per greenback at the central banks final reference, with investors bracing for the daily dollar auctions of $100 million that will be made by the central bank as of next week.