Chile's peso slumped on Friday to lead losses among Latin American currencies after inflation surged by more than expected, while Brazil's stocks benchmark jumped more than 3pc, their biggest daily gain in nine months.
Chile's peso dropped 1.6pc to its weakest since May 2020, after data showed consumer price inflation in September surged well above central bank estimates.
Chile has been grappling with high inflation as a strong COVID vaccination campaign spurred a swift return to economic normality. Investors have bet the central bank will pick up the pace and magnitude of rate hikes.
The surprisingly high inflation in September, coupled with dollar purchases to shore up foreign exchange reserves, have led to the sharp decline in the Chilean peso, an FX trader said.
US non-farm payrolls were drastically below expectations, and emerging markets showed a mixed reaction as analysts largely said they still expect the US Federal Reserve to taper monetary stimulus as planned.
Brazil's real was flat, headed for a weekly loss of about 2.7pc. Data showed September consumer prices grew at their fastest pace for the month since 1994 due to higher fuel and electricity prices, but still rose less than expected.
Surging inflation has pushed Brazil's central bank into hiking interest rates five times this year, with more hikes to come.
Stocks in Sao Paulo were last trading up 2.4pc after rising as much as 3.3pc during the session. Banks led broad-based gains, followed by consumer discretionary stocks.
Still, the index is up only 0.5pc for the week. Global markets were routed early this week on worries about Chinese debt and inflation fears, especially in Brazil where inflation is already well above the central bank's target.
Most other Latin American stocks also rose on Friday.
Peru's sol rose 0.2pc in slim holiday trade as President Pedro Castillo confirmed the current President of the Central Bank Julio Velarde for another term.
Overnight, the central bank had hiked the key interest rate to 1.5pc as expected.
The sol had surged 1pc on Thursday as a cabinet reshuffle by Castillo was perceived positively by investors, in particular the appointment of new prime minister Mirtha Vasquez.
Argentine markets were closed for a holiday.