By Ankika Biswas and Lisa Pauline Mattackal

March 22 (Reuters) – Emerging market currencies slid on Friday, eyeing their worst week since January as a rising dollar weighed, though Colombia’s peso outshone peers after its central bank reduced interest rates and increased forecasts for economic growth.

The MSCI index tracking Latam currencies .MILA00000CUS shed 0.4% on the day and 0.2% for the week, its first week in the red since the start of March.

Colombia’s peso bucked the trend, rising 0.4% after the central bank cut benchmark interest rates by 50 basis points as expected, but upped forecasts for growth.

The index tracking global emerging market currencies .MIEM00000CUS dropped 0.7% in its worst week since January as the dollar headed for its strongest week in ten and the Chinese yuan fell.

Those decisions close a busy week for markets that included Japan’s historic rate hike and Switzerland’s surprise rate cut, while the U.S. Federal Reserve stuck to its projections for three rate cuts in 2024.

“Borrowing costs will remain elevated in real terms … in the U.S. and Europe, this and tightening fiscal policy will hinder domestic demand in advanced economies, domestic demand in China and EM ex-China will remain very tepid, with risks skewed to the downside,” analysts at BCA Research wrote.

Colombia’s decision comes on the heels of Mexico’s first rate cut since 2021 and Brazil’s 50-bp rate cut this week.

Brazil’s real BRL=, Chile’s peso CLP=CLand Peru’s sol PEN=PE fell between 0.3% and 0.8% against the greenback.

Meanwhile, Argentina’s dollar-denominated international bondsrallied as investors continued to bet that President Javier Milei will fulfill campaign promises to reform the struggling economy.

Data showed Mexico’s consumer prices rose alongside expectations in the first half of March, while core inflation beat estimates, reinforcing bets of slow-paced upcoming rate cuts. Another data set showed the country’s economy shrank 0.6% in January from December and expanded 2% year-on-year.

Mexico’s peso MXN=D2 fell 0.2%.

The Latin American stocks gauge .MILA00000PUS lost 0.9% in its worst day in two weeks, led by a nearly 1% loss in Brazilian stocks. .BVSP

Russia’s central bank held rates steady at 16%, warning inflationary pressure remained high and tight monetary conditions would be maintained for a long time to try to return inflation to the 4% target.

The roubleRUBUTSTN=MCX weakened towards the 93-per-dollar mark.

“It’s looking more likely that the central bank might start an easing cycle in the third quarter once inflation has clearly reached a peak,” said Liam Peach, senior emerging markets economist, Capital Economics.

Key Latin American stock indexes and currencies at 1930 GMT:

Latest

Daily % change

MSCI Emerging Markets .MSCIEF

1038.15

-0.97

MSCI LatAm .MILA00000PUS

2505.44

-0.92

Brazil Bovespa .BVSP

126957.44

-0.94

Mexico IPC .MXX

56579.07

-0.14

Chile IPSA .SPIPSA

6515.90

0.46

Argentina MerVal .MERV

1222455.42

-0.248

Colombia COLCAP .COLCAP

1324.01

0.18

Currencies

Latest

Daily % change

Brazil real BRBY

4.9997

-0.42

Mexico peso MXN=D2

16.7646

-0.18

Chile peso CLP=CL

980.6

-0.80

Colombia peso COP=

3891.1

0.37

Peru sol PEN=PE

3.6867

-0.30

Argentina peso (interbank) ARS=RASL

854.5000

0.00

Argentina peso (parallel) ARSB=

1000

3.00

(Reporting by Ankika Biswas and Lisa Mattackal in Bengaluru; editing by Deepa Babington and Nick Macfie)

((Ankika.Biswas@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.