August 24, 2018 / 10:11 PM / 4 months ago

EMERGING MARKETS-LatAm currencies jump on Fed comments, Argentina peso hits record low

 (Updates prices, adds NAFTA news)
    By Bruno Federowski
    BRASILIA, Aug 24 (Reuters) - Latin American currencies
jumped on Friday after Federal Reserve Chairman Jerome Powell
expressed no surprises in a closely watched speech, suggesting a
slow-and-steady pace for U.S. interest rate hikes is still in
order.
    The U.S. dollar weakened as Powell, speaking at a
conference of central bankers in Jackson Hole, Wyoming, said a
gradual approach of raising rates remains appropriate to protect
the U.S. economy and keep job growth as strong as possible with
inflation under control.
    While most Latin American currencies firmed on the news, the
big regional exception was the Argentine peso, which fell to an
all-time low even as the central bank once again sold dollars
for future delivery in a bid to stem the peso's selloff.
    The currency fell 1.42 percent on Friday to close at 30.92
pesos per greenback.
    Argentina's peso has lost nearly 40 percent of its value
this year. It has ranked among the world's worst-performing
currencies in 2018, weighed down by a weak economy, high
inflation and uncertainty driven by corruption investigations.
    The country's benchmark MerVal stock index fell nearly 4
percent on Friday.
    A slow path of U.S. rate hikes would boost the allure of
higher-yielding, emerging market assets. Accordingly, currencies
from Mexico, Chile and Colombia firmed between 0.2 percent and
1.3 percent.
    The Chilean and Colombian pesos led the regional currencies
rally, tracking higher prices of key commodity exports copper
and crude oil.
    In Washington, talks between U.S. and Mexican officials to
update the more than two-decade-old North American Free Trade
Agreement, known as NAFTA, are set to continue through the
weekend, as negotiators say they are close to resolving
outstanding issues between the two countries.
    Canadian Foreign Minister Chrystia Freeland said on Friday
that U.S. and Mexican officials need to resolve bilateral issues
before Canada will rejoin the talks.
    
 Key Latin American stock indexes and currencies at 2051 GMT:
    
 Stock indexes                 Latest    Daily pct    YTD pct
                                            change     change
 MSCI Emerging Markets         1,050.19       0.19      -9.35
                                                    
 MSCI LatAm                    2,491.17       0.42     -11.92
 Brazil Bovespa               76,262.23       0.83      -0.18
 Mexico IPC                   49,633.77      -0.23       0.57
 Argentina MerVal             25,158.61      -5.14     -16.32
 Colombia IGBC                12,185.99       0.23       7.17
 Venezuela IBC               419,352.41      -7.82  33,099.20
                                                             
 Currencies                      Latest  Daily pct    YTD pct
                                            change     change
 Brazil real                     4.1027       0.02     -19.24
 Mexico peso                    18.9200       0.50       4.12
 Chile peso                         660       1.36      -6.87
 Colombia peso                    2,955       1.04       0.91
 Peru sol                         3.295       0.21      -1.76
 Argentina peso (interbank)     30.8000      -1.04     -39.61
                                                    
 Argentina peso (parallel)         31.6      -1.90     -39.15
                                                    
 
 (Additional reporting by David Alire Garcia in Mexico City
Editing by James Dalgleish)
  
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