EMERGING MARKETS-Brazil’s real sinks 4%, other FX rally on dollar weakness

(Adds commentary on Mexico rate decision, details; updates prices) By Susan Mathew and Ankika Vishwas Nov 10 (Reuters) – Brazil’s real fell more than 4% on Thursday on financial worries, while other emerging market currencies rose after data showed U.S. inflation cooled further. More than expected last month, as the Federal Reserve moderated interest rate hikes. The dollar sank 1.8 percent after data showed U.S. consumer prices rose 7.7 percent in October, below expectations for an 8 percent gain. Bets for a 50-basis-point hike from the Fed jumped to 73%, calming investors’ nerves about a fifth consecutive 75 bp hike in December this year. As Wall Street rallied, emerging market stocks pared some of their session losses, last trading down 0.6%. Markets were relieved after major central banks tightened aggressive monetary policy, dampening global risk sentiment on fears of a recession. Although emerging markets began their monetary policy tightening cycle ahead of their developed peers, inflation has consistently exceeded expectations in those countries. The Bank of Mexico on Thursday raised its key interest rate by 75 basis points to a record 10.00%, as expected, to combat higher inflation and it will assess the magnitude of upward adjustments to the reference rate based on prevailing conditions in the future. Meetings. “They didn’t have much guidance in terms of what they were going to do beyond that. If they had had stronger guidance, or if they had expressed more concern about inflation, we would have a much stronger peso today,” he said. Ed Al Husseini, senior interest rate and currency analyst at Columbia Threadneedle Investments. The Mexican peso extended gains to 1.2% in volatile trade. In other currencies, the Peruvian sol rose 0.4% ahead of a policy decision later in the day, with rates expected to rise by 25 bps to 7.25%. Real Tumble Brazil’s real sank 4.1%, while the benchmark Bovespa stock index fell nearly 4% as investors grew impatient with President-elect Luiz Inacio Lula da Silva’s desire to increase social spending without establishing long-term fiscal rules or naming his top economic policymakers. “Many investors were of the opinion that they should withdraw from the election. It was a very attractive investment and they jumped,” Al-Hussaini added. “Now there is some acid reflux because they are realizing that the policy mix that the Lula government is coming up with is not very market friendly.” मुख्य ल्याटिन अमेरिकी स्टक अनुक्रमणिकाहरू र मुद्राहरू, स्टक अनुक्रमणिकाहरू भर्खरको दैनिक% उक्त दैनिक% 0.13783838.1371931 0.1371961 0.13 0.1371.13 0.41 0 मुद्राहरू पछिल्लो दैनिक% ब्राजिल वास्तविक .4008 -4008 -4008.06 मेक्सिको पेसो 1..37737373737373737373737373737373737373737373737373737373737373737373737373737373437373737373737373737373737373737373737373737373737373737373437374373737373737373737373737343737373737375 बेंगलुरु; (Editing by Kirsten Donovan and Leslie Adler)

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