EMERGING MARKETS-Latam currencies steady ahead of Fed; Brazil real slumps on Fitch

miércoles 16 de diciembre de 2015 12:43 GYT

SAO PAULO, Dec 16 (Reuters) - Latin American currencies
steadied on Wednesday before an expected U.S. interest rate
increase, while Brazil's real slumped after Fitch Ratings became
the second agency to cut the country's debt rating to junk.
    Fitch cut Brazil's rating to BB+ with a negative outlook,
saying impeachment proceedings against President Dilma Rousseff
heightened political risks amid a deepening recession.
    Standard & Poor's had stripped the country of its investment
grade in September, while Moody's Investor Service said last
week it was considering doing the same. 
    "It was a done deal; Fitch won the race. Now Moody's is just
embarrassed to be late to the party," said Pedro Tuesta, an
economist with 4Cast in Washington D.C.
    The real hit its lowest in two months after the
announcement but recovered partially as many traders were
already prepared for a second downgrade to junk. The currency
tumbled about 2 percent after the Brazilian government decided
to cut a key fiscal goal for next year, despite protests from
Finance Minister Joaquim Levy. 
    Levy has spearheaded the government's efforts to rein in
spending as it tries to regain investor confidence and fight a
deepening economic downturn. Local media reports said he had
threatened to leave his post if the target was reduced.
    Investors worried that the move could usher in a return to
the interventionist policies left-leaning Rousseff pursued over
her first term.
    In other trading, the Mexican peso weakened 0.2
percent, while the Colombian peso rose 0.2 percent
despite a drop in oil prices.
    Investors braced for what is expected to be the first U.S.
Federal Reserve hike in benchmark rates in almost a decade.
Although this could spell bad news for high-yielding emerging
market assets, traders hope the central bank will stress its
intention of tightening policy slowly over the following months.
    Latin American stock indexes and currencies at 1610 GMT:
 Stock indexes                                 daily %   YTD %
                                                change  change
 MSCI Emerging Markets                 789.66     1.32   -18.5
 MSCI LatAm                           1860.62    -0.46  -31.47
 Brazil Bovespa                      44544.97    -0.73  -10.92
 Mexico IPC                          43301.88     0.92    0.36
 Chile IPSA                           3599.77     0.83   -6.52
 Chile IGPA                          17772.88     0.71   -5.82
 Argentina MerVal                    11851.13     -3.7   38.14
 Colombia IGBC                        8287.31     1.26  -28.77
 Venezuela IBC                       14411.28    -0.41  273.47
 Currencies                                    daily %   YTD %
                                                change  change
 Brazil real                           3.9501    -1.92  -32.72
 Mexico peso                          17.1455    -0.21  -14.01
 Chile peso                               708     0.42  -14.35
 Colombia peso                        3312.78     0.07  -27.92
 Peru sol                              3.3691     0.12  -11.58
 Argentina peso (interbank)            9.8225    -0.18  -12.95
 Argentina peso (parallel)              14.43     0.76   -2.98
 (Reporting Bruno Federowski; Editing by Dan Grebler)