EMERGING MARKETS-Russia's rouble plummets as geopolitical tensions worsen, Latam FX dips
* Rouble marks worst fall since March 2020 * Chile's peso best weekly performer, up 2.2% * Peru's sol marks best week in four months (Adds details, updates prices) By Shashank Nayar and Ambar Warrick Feb 11 (Reuters) - Russia's rouble marked its worst fall in nearly two years on Friday after the United States said an invasion of Ukraine could happen any time, with most emerging market currencies also falling in tow. The rouble slumped more than 3% in its worst drop since the COVID shock in March 2020. Washington said Russia is massing more troops near Ukraine and an invasion could come at any time, including during this month's Winter Olympics. The statement rattled risk-driven assets, with most emerging market currencies marking steep losses. MSCI's index of currencies sank 0.32%, its worst drop since September 2021. Most Latin American currencies fell, but were headed for strong weekly gains on the back of strong commodity prices, as well as a series of hawkish signals from regional central banks. The real, was flat, but was set for its best weekly winning streak since May last year, with a 2% gain. Economic activity in Brazil rose 4.5% in 2021, a central bank index showed on Friday, in a rebound from the record contraction seen a year before, when Latin America's largest economy suffered a blow from the coronavirus pandemic. However, the growth outlook remains cloudy due to higher borrowing costs amid aggressive monetary tightening to battle double-digit inflation. Data analyzed by BofA showed emerging market equity funds had enjoyed a seventh straight week of inflows, attracting $5.3 billion in the week to Wednesday. The dollar index was steady on Friday following red hot inflation data that bolstered bets for an even more hawkish Federal Reserve, which could weigh on riskier assets. "The fiscal and monetary tailwinds that drove prices up are now headwinds – and supply chain constraints are easing," said Steven Blitz, chief U.S. economist at TS Lombard said in a note. Mexico's peso fell 0.1% as data showed that Mexican industrial output rose 1.2% in December from November and was 3% over the previous year. Chile's peso slipped 0.6%, but was the top Latin American performer this week, up 2.2% on expectations of hawkish central bank policies and as strong copper prices supported the currency of the copper exporting nation. A poll by the Chilean central bank showed that the benchmark interest rate is likely to rise 125 basis points at the next monetary policy meeting in March. Peru's sol fell 1.2% from a nine-month high and was set for its best week in four months after the central bank raised its benchmark interest rate by 50 basis points. Investors also hoped for political stability in the country after the latest cabinet shakeup. Key Latin American stock indexes and currencies: Latest Daily % change MSCI Emerging Markets 1237.99 -1.05 MSCI LatAm 2364.87 -0.15 Brazil Bovespa 113969.04 0.53 Mexico IPC 53293.40 1.32 Chile IPSA 4650.39 0.19 Argentina MerVal 89148.28 1.815 Colombia COLCAP 1478.04 0.19 Currencies Latest Daily % change Brazil real 5.2405 -0.04 Mexico peso 20.5660 -0.11 Chile peso 808.53 -0.61 Colombia peso 3921.42 -0.13 Peru sol 3.771 -1.21 Argentina peso (interbank) 106.1400 -0.11 (Reporting by Shashank Nayar in Bengaluru, Editing by Louise Heavens)
