September 26, 2018 / 11:05 PM / 3 months ago

EMERGING MARKETS-Brazil, Mexico currencies firm as Fed hikes U.S. rates

    SAO PAULO/MEXICO CITY, Sept 26 (Reuters) - Brazil and
Mexico's currencies firmed on Wednesday after the U.S. Federal
Reserve raised interest rates and left intact plans to steadily
tighten monetary policy, while strong polling by a
market-friendly Brazilian presidential candidate helped lift the
real.
    Brazil's real currency strengthened almost 1.3 percent after
the poll by Brazil's Instituto Parana showed right-wing Jair
Bolsonaro in the lead, with 31.2 percent of respondents planning
to vote for him in the first round of the presidential election
on Oct. 7. That compares with 20.2 percent support for Fernando
Haddad, the leftist protege of jailed former President Luiz
Inacio Lula da Silva.
    Crucially, the poll showed Bolsonaro winning a likely second
round later in October, with 44.3 percent of the vote versus
Haddad's 39.4 percent. Prior polls had shown Bolsonaro giving up
ground to his main leftist opponent.
    The poll came as welcome news to traders, who generally
favor Bolsonaro for his avowed free-market policies, after a
separate recent poll had shown Bolsonaro losing in a likely
run-off.
    "The market liked the poll because it showed Bolsonaro
rising, not stagnating," said Jose Carlos Amado, a trader at
brokerage Spinelli.
    The real climbed 1.27 percent against the dollar.
    Brazilian equities were effectively flat for much of
Wednesday, dragged down by heavily weighted iron ore miner Vale
SA and a slew of corruption arrests in the
infrastructure sector.
    The peso strengthened 0.83 percent on the back of
the Fed's decision and as it forecast that the U.S. economy
would enjoy at least three more years of growth.
    "The market has already discounted another rate increase (by
the Fed) in December, and was concerned there could be comments
in favor of up to four increases for next year, a situation that
did not happen, to which the markets reacted relatively
positively," said CI Banco in a report.
    The U.S. central bank foresees another rate hike in
December, three more next year, and one increase in
2020.
    
Key Latin American stock indexes and currencies at 1945 GMT:
 Stock indexes                 Latest         Daily   YTD pct
                                                pct    change
                                             change  
 MSCI Emerging Markets            1,047.60     0.56    -10.07
                                                     
 MSCI LatAm                       2,551.06     1.65    -11.26
                                                     
 Brazil Bovespa                  78,717.71     0.11      3.03
 Mexico IPC                      49,645.15    -0.01      0.59
 Argentina MerVal                33,960.10    -0.27     12.95
 Colombia IGBC                   12,321.70    -0.37      8.36
 Venezuela IBC                  321,252.47     0.49    913.25
                                                             
 Currencies                         Latest    Daily   YTD pct
                                                pct    change
                                             change  
 Brazil real                        4.0300     1.27    -17.78
 Mexico peso                       18.8360     0.83      4.58
 Chile peso                          660.3     0.91     -6.91
 Colombia peso                     2997.55     0.15     -0.52
 Peru sol                            3.302     0.18     -1.97
 Argentina peso (interbank)        38.5100    -0.03    -51.70
                                                     
 Argentina peso (parallel)              38     0.66    -49.39
                                                     
 
 (Reporting by Claudia Volante and Gram Slattery in Sao Paulo
and Anthony Esposito in Mexico City; additional reporting by
Paula Arend Laier; editing by Alistair Bell and Leslie Adler)
  
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