Investors are nervously watching central banks of emerging economies. Given that the Latin American economies will need to tame inflation by raising interest rates in the near future, their governments will have to devise new measures to deal with currency appreciation from capital inflows ($203 billion in 2010, as per the World Bank).

Chile’s central bank maintained the key benchmark interest rate at 3.25%, following seven consecutive hikes. The decision is aimed at restricting the scope for further appreciation in the export-oriented economy’s currency. Although the central bank raised its 2011 inflation expectations to 3.6% (3.2%, previously), I do not view inflationary pressures in Chile as an immediate cause for alarm.

As commodities prices cool some of the pressure for rate increases could be lessened short-term. But can you expect copper to fall when the fundamental demand is still so strong?

Speaking of fundamentals, the top performers in our newsletter service over the last week were:

• Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA) +17.5%
• Banco Santander (NYSE:STD) +13.6%
• Repsol YPF, S.A. (NYSE:REP) +12.5%
• Companhia Paranaense de Energia (NYSE:ELP) +8.1%
• Tim Participacoes S.A. (NYSE:TSU) +7.3%