December 20, 2017 / 10:19 PM / 6 months ago

EMERGING MARKETS-U.S. tax plan crimps major LatAm currencies

 (Updates prices, adds analyst comment)
    By Bruno Federowski
    BRASILIA, Dec 20 (Reuters) - Several Latin American
currencies weakened on Wednesday as the U.S. Congress passed a
dramatic tax overhaul, fueling expectations of faster Fed
interest rate hikes in coming months.
    Currencies from Mexico, Chile and Brazil
    slipped between 0.06 percent and 0.29 percent.
    The Republican-controlled U.S. House of Representatives gave
final approval on Wednesday to the biggest overhaul of the U.S.
tax code in 30 years.
    Tax cuts could lift U.S. inflation and force the Federal
Reserve to tighten policy at a faster-than-expected pace,
driving capital away from high-yielding assets. Still, doubts
over the bill's efficacy in boosting economic growth in the
United States curbed the dollar's gains.
    "I expect there'll be pressure on the U.S. fiscal accounts
without a substantial improvement to economic growth," Wagner
Investimentos director José Faria Junior said.
    Brazil's benchmark Bovespa stock index rose 0.94 percent.
Banks such as Itaú Unibanco Holding SA and Banco
Bradesco SA were among the gainers after Brazil's
central bank lowered reserve requirements, injecting 6.5 billion
reais ($1.97 billion) into the economy.  
    In Mexico, the IPC benchmark stock exchange and currency
were erratic as the tax bill neared passage, with the peso
reaching its lowest levels since mid-November. The index closed
down 0.04 percent. 
    "Investors speculate that Mexico could be affected in terms
of competitiveness against the United States in the attraction
of investment," CI Banco wrote in a note to investors.  
    
    Key Latin American stock indexes and currencies at 2053 GMT:
 Stock indexes                               daily %      YTD %
                              Latest          change     change
 MSCI Emerging Markets            1132.25          0       31.3
                                                      
 MSCI LatAm                       2767.21       0.57      17.55
                                                      
 Brazil Bovespa                  73367.03       0.94      21.82
                                                      
 Mexico IPC                      48385.05      -0.04       6.01
                                                      
 Chile IPSA                       5528.71      -1.06      33.18
                                                      
 Chile IGPA                      27795.22      -0.86      34.06
                                                      
 Argentina MerVal                28083.92       1.36      66.00
                                                      
 Colombia IGBC                   11147.11       0.39      10.06
                                                      
 Venezuela IBC                    1286.54      -0.32     -95.94
                                                      
                                                               
 Currencies                                  daily %      YTD %
                                              change     change
                                   Latest             
 Brazil real                       3.2972      -0.11      -1.46
                                                      
 Mexico peso                      19.2555      -0.29       7.73
                                                      
 Chile peso                         620.4      -0.06       8.11
                                                      
 Colombia peso                     2962.3       0.13       1.32
 Peru sol                           3.267       0.43       4.50
                                                      
 Argentina peso (interbank)       17.7500       0.00     -10.56
                                                      
 Argentina peso (parallel)          18.01       0.83      -6.61
                                                      
 
 (Reporting by Bruno Federowski; Additional reporting by Julia
Love; Editing by David Gregorio and Rosalba O'Brien)
  
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