EMERGING MARKETS-Brazil overtakes Latam FX on economic and fiscal optimism; Mexican peso lags behind

* Brazilian real hits two-month high * Mexican peso falls, lowest in a week * Chile’s peso falls a day after central bank decision By Shashwat Chauhan and Shreyashi Sanyal, April 5 (Reuters) – The Brazilian real rose on Wednesday launched a new fiscal framework on positive data and optimism, while the Mexican peso underperformed its regional peers on concerns about the impact of a US economic slowdown. The Brazilian real gained 0.8% against the dollar to hit a two-month high, also helped by a weaker dollar as more data suggested the US economy was slowing. Brazil’s central bank governor Roberto Campos said the fiscal efforts of President Luiz Inacio Lula da Silva’s government so far have been positive and have removed the risk of a “more uncoordinated” debt development. “The new fiscal framework is credible and aims to reduce the fiscal deficit,” Elizabeth Johnson, head of TS Lombard’s Brazil research team, said in a statement. Johnson said that unlike the previous government’s spending cap, which prohibited increases in government spending except during a “state of emergency,” the new rule will allow the government to increase primary spending by up to 70%. Data showed that Brazil’s services sector rebounded, returning to growth in March at the fastest pace in five months. The Mexican peso fell 1% against the dollar, hitting its lowest level in a week earlier in the day. Data showed that consumer prices slowed more-than-expected in the year to March after Mexico’s central bank hiked interest rates last week, despite remaining dovish on future moves. “The way Mexico is positioned, its economy will depend on working and trading with the US, and that will take a hit, weighed down by the recession that will hit the US,” said Edward Moya, Senior Market Analyst at Oanda. The Chilean peso fell 0.9% against the dollar, a day after the central bank kept interest rates on hold at 11.25%. The Central Bank of Chile has set economic output for 2023 at between -0.5% and +0.5% amid the slowdown in activity following the rapid recovery from the COVID-19 pandemic, versus its previous forecast of a contraction in activity between 0 .5%-1.75%. The Colombian peso extended gains for the third straight day, rising 0.1% as oil prices held steady after a surprise OPEC+ production cut on Sunday pushed oil prices higher. Data showed that Colombian inflation rose slightly above expectations in March. Latin America stock index MSCI lost 0.2%, dragged down by a fall of over 1% in Brazil’s Bovespa. Meanwhile, the Polish zloty weakened 0.3% against the euro after its central bank kept interest rates on hold at 6.75%. Major Latin American Stock Indices & Currencies at 15:16 GMT: Stock Indices Latest Daily % Change MSCI Emerging Markets 986.76 -0.09 MSCI LatAm 2162.15 -1.17 Brazil Bovespa 100127.11 -1.71 Mexico IPC 53984.37 -0.35 Chile IPSA 5219.14 -0.13 Argentina MerVal 248001.97 – COLC` Colombia 1172.95 -0.47 Currencies Last DAY % Change Brazilian Real 5.0491 0.65 Mexico Peso 18.3300 -1, 16 Chile peso 811.8 -0.42 Colombia peso 4574.85 0.13 Peru sol 3.7701 -0.25 Argentina peso 211.2300 -0.20 (Interbank) Chauhan and Shreyashi Sanyal in Bengaluru processing by Marguerita Choy)