EMERGING MARKETS-Brazil real drops on strong U.S. GDP data
(Recasts after release of stronger-than-expected U.S. data) SAO PAULO, Dec 23 (Reuters) - The Brazilian real weakened about 1.5 percent on Tuesday after stronger-than-expected U.S. economic growth fueled fears that interest rates may go up sooner than anticipated in the world's largest economy. The currencies of Colombia and Peru also posted losses after the U.S. gross domestic product number, however the Mexican peso was supported by local data showing the economy expanded more than expected in October. Higher interest rates in the United States could reduce investor appetite for risk in emerging markets. Fears that the Federal Reserve may tighten its monetary policy sooner than forecast increased after data showed the U.S. economy grew at its fastest pace in 11 years in the third quarter. Trading volumes were thin in a week shortened by the Christmas holiday. Yields paid on Brazil's interest-rate contracts initially rose after the central bank raised its inflation forecast for next year and stopped using the word "parsimony" when describing its current monetary tightening cycle. The new estimate drove traders to increase bets that policymakers will continue to raise the benchmark Selic rate at an aggressive pace of 0.5 percentage point in January. Brazil's interest-rate futures trimmed gains later as trading volumes dwindled in the afternoon. Key Latin American stock indexes and currencies at 1525 GMT: Stock indexes daily % YTD % change change Latest MSCI Emerging 949.65 -0.83 -4.5 Markets MSCI LatAm 2705.56 -0.99 -14.62 Brazil Bovespa 50116.19 -0.01 -2.70 Mexico IPC 43058.2 0.43 0.77 Chile IPSA 3807.19 0.23 2.92 Chile IGPA 18677.73 0.19 2.47 Argentina MerVal 8185.55 0.38 51.84 Colombia IGBC 11881.41 1.44 -9.10 Peru IGRA 14562.28 0.38 -7.56 Venezuela IBC 3802.8 0 38.96 Currencies daily % YTD % change change Latest Brazil real 2.6998 -1.47 -12.70 Mexico peso 14.6812 -0.10 -11.25 Chile peso 608.9 0.10 -13.60 Colombia peso 2343.99 -0.72 -17.58 Peru sol 2.975 -0.17 -6.12 Argentina peso 8.5500 0.03 -24.06 (interbank) Argentina peso 13.15 0.23 -23.95 (parallel) (Reporting by Walter Brandimarte Editing by W Simon and Meredith Mazzilli)
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