October 4, 2017 / 4:54 PM / a year ago

EMERGING MARKETS-LatAm currencies firm on expectations of low U.S. rates

    By Bruno Federowski
    SAO PAULO, Oct 4 (Reuters) - Most Latin American currencies
strengthened on Thursday on expectations that U.S. President
Donald Trump will appoint a less hawkish head of the Federal
Reserve than expected.
    Politico reported on Tuesday that Treasury Secretary Steven
Mnuchin favors the appointment of Fed Governor Jerome Powell as
Fed chair over former Governor Kevin Warsh, who is seen as more
    The report fueled expectations that U.S. interest rates will
rise slowly in coming months as inflation remains stubbornly
below the U.S. central bank's 2 percent target
    Currencies from Brazil, Chile and Colombia
 firmed between 0.2 percent and 0.7 percent, supported by
the prospect of stronger demand for high-yielding assets.
    That perception lost some steam, however, following
stronger-than-expected service-sector figures, which boosted the
likelihood that the Fed will hike rates in December.

    Brazil's benchmark Bovespa stock index seesawed
after jumping the most since August to an all-time high the day
before. Still, analysts expect Brazilian stocks to continue
rising as Latin America's largest economy emerges from its
deepest recession in a century.
    "Yesterday's advance may invite some profit-taking today,
but the long-term trend still points upward," Modalmais chief
economist Alvaro Bandeira said.
    Shares in state-controlled oil company Petróleo Brasileiro
SA slipped 1 percent as investors booked profits from
the previous day's rally. The stock rose sharply on Wednesday
after a minister said a privatization would be feasible in the
long run.
    Key Latin American stock indexes and currencies at 1720 GMT:
 Stock indexes                                daily %    YTD %
                                               change   change
 MSCI Emerging Markets               1102.93     0.54    27.23
 MSCI LatAm                          3006.29     0.54    27.75
 Brazil Bovespa                     76868.99     0.14    27.63
 Mexico S&P/BVM IPC                 50706.34     0.18    11.09
 Chile IPSA                          5439.40     0.36    31.03
 Chile IGPA                         27193.84     0.39    31.15
 Argentina MerVal                   26422.21    -0.94    56.18
 Colombia IGBC                      11059.06    -0.58     9.19
 Venezuela IBC                     539053.69     4.76  1600.20
 Currencies                                   daily %    YTD %
                                               change   change
 Brazil real                          3.1237     0.69     4.02
 Mexico peso                         18.2320    -0.10    13.78
 Chile peso                           631.05     0.18     6.28
 Colombia peso                       2943.78     0.25     1.96
 Peru sol                              3.256     0.18     4.85
 Argentina peso (interbank)          17.3500     0.37    -8.50
 Argentina peso (parallel)             17.82     0.45    -5.61
 (Reporting by Bruno Federowski; Editing by Jonathan Oatis)
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