March 20, 2019 / 9:30 PM / 3 months ago

EMERGING MARKETS-Most Latam FX, stocks jump as Fed remains patient

 (Recasts throughout, updates prices)
    By Susan Mathew
    March 20 (Reuters) - Most Latin American currencies and
stocks jumped on Friday after the U.S. Federal Reserve affirmed
its patient stance, abandoning rate hikes for the rest of the
year, hammering the dollar.
    Amid a slowing economy the Fed now sees only one rate hike
next year, and announced a plan to end its balance sheet
reduction program by September.
    Mexico's peso leapt 1 percent to a five-month high,
while Brazil's real firmed up to 1.3 percent before
closing 0.3 percent higher against a significantly weaker
dollar.
    "I think the initial reaction tells a lot about what the
medium to long term impact is going to be. Neutral Fed this year
and balance sheet taper ending, that is going to be positive for
risk," said Sacha Tihanyi, deputy head of emerging markets
strategy at TD Securities. 
    A steady move higher in U.S. interest rates had sucked money
out of high-yielding bets in the developing world over the last
year, prompting currency sell-offs or crises in Argentina,
Turkey and India among others.
    Bulls in Brazil's real were also watching for the local
central bank's rate decision, the first under new central bank
chief Roberto Campos Neto, after market close. 
    The bank kept rate unchanged, as expected and a Reuters poll
showed them staying on hold possibly for the rest of the year.

    "The meeting communique will mostly stick to the same
script, despite weaker economic data since the last meeting," 
wrote Citigroup analysts, saying a new central bank head doesn't
typically come off as dovish at the start of the tenure, and
that room for rate cuts depends on passing the pension reform.  
    "The market might be disappointed by a lack of dovish
signals. But, any pullback will be limited in our view," they
said.
    Currencies of Chile and Colombia rose 0.8
percent and 0.3 percent, respectively, with the Colombian peso
clocking its seventh straight day of gains. The Argentine peso
 dipped 0.8 percent on hedging among private investors.

    Among stocks, Mexican shares surged 1.8 percent to
their best one-day gain in almost four months, while Argentine
 and Colombian stocks climbed  more than 1
percent each, with the latter hitting a more than four year
high.
    Brazil shares, however, closed 1.6 percent lower on
broad-based losses, as focus remained on passage on the much
anticipated pension reforms as it makes it way through Congress.
    The index had hit new highs multiple times over the past few
sessions, and has gained 3.3 percent so far this month. 
    
    Key Latin American stock indexes and currencies at 2100 GMT:
 
    Stock indexes             Latest    Daily %
                                         change
 MSCI Emerging Markets         1068.47     -0.23
                                        
 MSCI LatAm                    2869.37     -0.87
                                        
 Brazil Bovespa               98041.37     -1.55
                                        
 Mexico IPC                   43156.21      1.83
                                        
 Chile IPSA                    5245.09     -1.14
                                        
 Argentina MerVal             34792.18      1.22
                                        
 Colombia IGBC                13327.64      1.21
                                        
                                                
       Currencies             Latest    Daily %
                                         change
 Brazil real                    3.7761     -0.29
                                        
 Mexico peso                   18.8283      0.98
                                        
 Chile peso                     661.95      0.73
                                        
 Colombia peso                  3086.5      0.32
 Peru sol                        3.292      0.18
                                        
 Argentina peso                40.8100     -0.64
 (interbank)                            
                                        
 

 (Reporting by Susan Mathew in Bengaluru; Editing by Lisa
Shumaker)
  
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