January 29, 2018 / 4:08 PM / 8 months ago

EMERGING MARKETS-LatAm currencies weaker on prospects of tighter policy abroad

    By Bruno Federowski
    SAO PAULO, Jan 29 (Reuters) - Latin American currencies
weakened on Monday as prospects of tighter monetary policy
throughout developed markets drove investors away from
high-yielding assets.
    Dutch central bank president Klaas Knot said on Sunday that
"there is no reason whatsoever" for the European Central Bank
(ECB) to continue its asset purchase program, suggesting years
of policy stimulus may be coming to an end sooner than expected.
    His remarks added to a growing perception that strong global
growth could force policymakers to tighten policy faster in
coming months, potentially draining funds away from emerging
markets.
    Some economists expect the Federal Reserve to raise its
economic assessment when it concludes its two-day meeting on
Wednesday, which would increase the probability that the U.S.
central bank raises interest rates four times this year.
    The U.S. government's key payrolls report, scheduled for
Friday, could also shed further light on the outlook for
monetary policy.
    Currencies from Chile, Colombia, Mexico
 and Brazil weakened between 0.5 percent and 1
percent, capping a January rally that saw all of them post hefty
gains in 2018.
    Stock markets were mixed, with Brazil's benchmark Bovespa
stock index down 1 percent as traders booked profits on
recent gains that drove it to all-time highs.
    Shares of wood pulp producer Fibria Celulose SA,
however, jumped 8 percent, the biggest gainer on the index, on a
report that Netherlands-based Paper Excellence was considering
acquiring it.
    Paper Excellence, which is controlled by the owners of
Indonesia's Asia Pulp & Paper Co Ltd, has hired Banco BTG
Pactual SA to advise on a possible acquisition of Fibria,
newspaper O Globo reported on its website, without saying how it
obtained the information.
    But two sources close to Fibria told Reuters the company is
not seeking a buyer and that controlling shareholders have not
received any bid.

    Key Latin American stock indexes and currencies at 1550 GMT:
 Stock indexes                                daily %   YTD %
                                               change  change
                                   Latest              
 MSCI Emerging Markets               1267.04    -0.47    9.89
 MSCI LatAm                          3195.33    -1.42   14.61
 Brazil Bovespa                     84708.06    -0.96   10.87
 Mexico IPC                         50748.93    -0.62    2.83
 Chile IPSA                          5869.19     0.23    5.47
 Chile IGPA                         29472.34      0.2    5.33
 Argentina MerVal                   34395.97    -2.08   14.40
 Colombia IGBC                      12356.51    -0.02    8.67
                                                             
 Currencies                                   daily %   YTD %
                                               change  change
                                      Latest           
 Brazil real                          3.1693    -0.94    4.54
 Mexico peso                         18.6775    -1.01    5.47
 Chile peso                           604.62    -0.50    1.66
 Colombia peso                       2844.52    -1.11    4.83
 Peru sol                              3.217    -0.53    0.62
 Argentina peso (interbank)          19.5600     0.06   -4.91
                                                       
 Argentina peso (parallel)             19.99    -0.05   -3.80
                                                       
 
 (Reporting by Bruno Federowski; Editing by Susan Thomas)
  
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