(Recasts, updates prices)
MEXICO CITY, Feb 9 Mexico's peso strengthened on
Thursday, after the country's central bank raised its benchmark
interest rate in a bid to fend off quickening inflation after a
spike in gasoline prices added to pressure from a weak currency.
The peso gained more than 0.5 percent after the central bank
raised its key rate by 50 basis points to 6.25 percent, the
highest level since March 2009 and in line with expectations in
a Reuters poll.
But policymakers suggested further rate hikes were possible
if higher gasoline prices and a weaker peso push up the costs of
other goods and services.
"The central bank is reacting the way it should," said
Gustavo Rangel, chief economist for Latin America at ING in New
York. "The positive thing (for the peso) for Banxico to do would
be to more aggressive than the market expects. The negative risk
would be to do less."
Rangel also said the market has underestimated how much
inflation could rise in Mexico and expected the central bank to
continue raising rates to 7.50 percent by year-end.
Yields on interest rate swaps are pointing to bets that
Mexico's benchmark rate will end 2017 around 7 percent.
Elsewhere, the initial public offering for Mexico's Jose
Cuervo raised more than $900 million in the country's first IPO
since November, boosting the local stock exchange.
Shares in Cuervo priced at 34 pesos ($1.67), and
jumped more than 8 percent after the market opened before paring
gains to close up 4.2 percent at 35.43 pesos.
Shares of Mexican cement producer Cemex were a
leading gainer on the benchmark IPC index, after the
company beat analysts' expectations with a reported 48-percent
jump in fourth-quarter net profit.
The index closed 0.6 percent higher on Thursday.
Key Latin American stock indexes and currencies at 2230 GMT:
Stock indexes Latest Daily pct YTD pct
MSCI Emerging Markets 925.57 0.42 7.34
MSCI LatAm 2,555.77 0.41 9.19
Brazil Bovespa 64,964.89 0.2 7.87
Mexico IPC 47,232.17 0.66 3.48
Chile IPSA 4,296.15 0.68 3.49
Chile IGPA 21,420.26 0.6 3.31
Argentina MerVal 19,302.25 0.8 14.09
Colombia IGBC 10,029.68 -0.29 -0.97
Venezuela IBC 27,733.47 -1.91 -12.53
Currencies Latest Daily pct YTD pct
Brazil real 3.1284 -0.304 3.86
Mexico peso 20.3500 0.627 1.94
Chile peso 645.4 0.00 3.92
Colombia peso 2,858.3 0.00 5.01
Peru sol 3.267 0.00 4.50
(Reporting by Natalie Schachar and Michael O'Boyle, editing by