EMERGING MARKETS-Currencies firm against a sliding dollar ahead of Fed meeting

* Brazilian industrial production rises in March * Colombian presidential front-runner cancels events * Peruvian mine protesters refuse to talk unless emergency lifted By Susan Mathew May 3 (Reuters) – Emerging market currencies rose on Tuesday, with South Africa’s rand jumping 2.4% and Brazil’s real 1% as the dollar slid ahead of the U.S. Federal Reserve’s policy decision later this week, 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. “U.S. rates are unlikely to peak this early in the cycle and remain a headwind for EM rates. Food prices remain high, and EM central banks remain relatively hawkish,” said strategists at Citigroup. “Fading commodity prices and weaker risk sentiment, combined with heavy positioning in Latam may continue to create USD upside,” they added. But as the dollar slid on Tuesday, South Africa’s rand jumped from its lowest this year, while Mexico’s peso rose 0.5%. 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 5.01 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 inched lower, Colombia’s peso gave up session gains. 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 was flat as 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 1419 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1069.86 -0.25 MSCI LatAm 2280.02 0 Brazil Bovespa 106960.27 0.3 Mexico IPC 51382.50 -0.97 Chile IPSA 4756.38 -0.07 Argentina MerVal – – Colombia COLCAP 1593.79 0.7 Currencies Latest Daily % change Brazil real 5.0197 1.01 Mexico peso 20.3073 0.76 Chile peso 855.2 0.56 Colombia peso 4006.45 -0.09 Peru sol 3.816 0.42 Argentina peso 115.8700 -0.11 (interbank) (Reporting by Susan Mathew in Bengaluru Editing by Mark Potter)

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