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Brazil lifts 2025 inflation projections to 4%

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Brazil's Suzano up on dropping plan to buy International

Paper ( IP )

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Bank of Mexico holds key interest rate at 11%

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Rand drops on reported discord over cabinet posts

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FX off 0.4%, stocks up 0.1%

(Updated at 03:55 p.m. ET/ 1955 GMT)

By Johann M Cherian and Shristi Achar A

June 27 (Reuters) -

Most Latin American currencies slipped on Thursday, with the

Mexican peso falling for the third session, after its central

bank left the key interest rate unchanged but acknowledged

progress on the inflation front.

Mexico's peso lost 0.4% as the Bank of Mexico

(Banxico) held its benchmark interest rate steady at 11.00% in a

split decision, and said it expects the country's disinflation

process to continue.

"They're essentially not placing too much weight on the

potential for inflationary pressures as a result of the

weakening of the Mexican peso post-election," said Christian

Lawrence, senior market strategist, LatAm FX at Rabobank.

"That is interesting because it certainly tilts the

balance towards rate cuts definitely still coming this year."

Investors also digested the four cabinet appointments in

President-elect Claudia Sheinbaum's government, including a pair

of former Mexico City officials to be her ministers for energy

and transportation.

The peso had depreciated significantly and is down over 7%

year-to-date following her landslide win earlier in the month.

MSCI's index tracking Latam currencies

slipped 0.4%, with Brazil's real edging up 0.2%, hovering

near levels last seen in January 2022 it hit in the previous

session.

Brazil's local central bank upped its 2025 inflation

forecasts to 4%, citing stronger-than-expected activity which

led it to halt interest rate cuts earlier this month. The

regulator has a continuous inflation target of 3%.

Separately, Brazilian central bank chief Roberto Campos Neto

said that a rate hike is not the bank's baseline scenario, and

policymakers have intentionally chosen not to provide any

guidance at this time.

Currency of copper producers, Chile and Peru

weakened as prices of the red-metal hit their weakest in more

than two months.

On the equities front, MSCI's index tracking Latin American

stocks edged 0.1% higher.

Brazil's heavyweight Bovespa index climbed 1.2%,

with Suzano jumping nearly 13% after the pulpmaker

said it has terminated talks to buy International Paper ( IP ).

Petrobras climbed 1.9% after brokerage Bank of

America upgraded the oil firm to "buy".

Equatorial advanced 6.3% after the power company

was the only bidder for holding a 15% stake in water utility

Sabesp, which is currently under a privatization

process.

Elsewhere, Bolivia's boliviano edged up 0.1% in thin

trades after an attempted coup was thwarted.

South Africa's rand depreciated over 1% on reports of

major disagreements over cabinet posts.

Kenya's shilling slipped as civil unrest continued

even after the president bowed to pressure to withdraw a tax

hike bill.

Key Latin American stock indexes and currencies:

Latest Daily %

change

MSCI Emerging Markets 1081.92 -0.39

MSCI LatAm 2183.84 0.09

Brazil Bovespa 124110.58 1.2

Mexico IPC 52197.06 -0.52

Chile IPSA 6492.32 -0.31

Argentina MerVal 1627853.66 3.39

Colombia COLCAP 1377.35 0.62

Currencies Latest Daily %

change

Brazil real 5.5049 0.24

Mexico peso 18.4058 -0.44

Chile peso 954.9 -0.44

Colombia peso 4170.5 -0.62

Peru sol 3.8199 -0.04

Argentina peso (interbank) 910.5000 0.16