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EMERGING MARKETS-Latam currencies trade sideways on Fed rates caution
May 25, 2017 / 4:09 PM / 6 months ago

EMERGING MARKETS-Latam currencies trade sideways on Fed rates caution

    By Bruno Federowski
    SAO PAULO, May 25 (Reuters) - Most Latin American currencies
traded sideways on Thursday after the Federal Reserve dialed
down some expectations that it would hike interest rates
rapidly, while political uncertainty weighed on Brazilian
markets.
    Fed policymakers agreed they should hold off on raising
rates until they see evidence a recent U.S. economic slowdown
was transitory, though most said a hike was coming soon, the
minutes from their last policy meeting showed on Wednesday.

    Traders interpreted the minutes as a cautionary sign from
the U.S. central bank, dialing back bets that it would increase
rates at a fast pace in the coming months.
    A slower pace of U.S. rate hikes would be good news for
emerging market assets, which typically lure investors with the
promise of higher returns.
    Demand for risky currencies has suffered amid concerns U.S.
President Donald Trump may struggle to pass his pro-growth
economic agenda due to political scandals. Investors had bet on
a U.S. growth surge boosting emerging market economies. 
    The Mexican peso strengthened 0.1 percent on
Thursday, while the Colombian peso was down 0.2 percent.
    Also fostering caution in Brazilian markets was growing
political turmoil resulting from a scandal in which President
Michel Temer was caught on tape allegedly condoning bribes to
silence a key witness in a corruption case last week.
    Protesters demanding Temer's resignation staged running
battles with police and set fire to a ministry building in the
capital, Brasilia, on Wednesday, prompting Temer to order the
army onto the streets.
    Brazil's stocks and currency were slightly lower in
early afternoon trading as traders reacted cautiously to the
uncertainty.
    Shares in pulpmakers Suzano Papel e Celulose SA
and Fibria Celulose SA were the biggest gainers after
announcing price hikes for international clients.

    
    Key Latin American stock indexes and currencies at 1530 GMT:
 Stock indexes                                daily %    YTD %
                                               change   change
                                   Latest              
 MSCI Emerging Markets               1013.64     0.86    16.56
 MSCI LatAm                          2551.63    -0.26      9.3
 Brazil Bovespa                     63162.44    -0.15     4.87
 Mexico IPC                         49441.53    -0.11     8.32
 Chile IPSA                          4856.45    -0.31    16.98
 Chile IGPA                         24377.60    -0.26    17.57
 Argentina MerVal                   21684.59     0.76    28.18
 Colombia IGBC                      10731.28    -0.25     5.96
 Venezuela IBC                      75620.85     4.03   138.51
                                                              
 Currencies                                   daily %    YTD %
                                               change   change
                                      Latest           
 Brazil real                          3.2855    -0.23    -1.10
 Mexico peso                         18.4340     0.07    12.53
 Chile peso                           668.75     0.32     0.29
 Colombia peso                        2909.1    -0.21     3.18
 Peru sol                              3.263     0.12     4.63
 Argentina peso (interbank)          16.0800     0.12    -1.27
                                                       
 Argentina peso (parallel)             16.24     0.25     3.57
                                                       
 

 (Reporting by Bruno Federowski; Editing by Paul Simao)
  

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