EMERGING MARKETS-Brazil real slumps on Fitch, U.S. Fed boosts Mexican peso

miércoles 16 de diciembre de 2015 21:18 GYT
 

(Updates prices)
    SAO PAULO, Dec 16 (Reuters) - Brazil's real slumped after
Fitch Ratings became the second agency to cut the country's debt
rating to junk, while the U.S. Federal Reserve's decision to
raise interest rates for the first time in nearly a decade
boosted Mexico's peso.
    Brazil's currency fell sharply after Fitch cut its rating to
BB+ with a negative outlook, saying impeachment proceedings
against President Dilma Rousseff heightened political risks amid
a deepening recession. 
    The real was down 1.23 percent to 3.9227 per dollar.
    The Brazilian currency tumbled after the country's
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. 
    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.
    Meanwhile, Mexico's peso reversed losses to gain 0.8
percent to close at 16.973 per dollar following the Fed interest
rate hike, capping its best 6-day stretch in about three weeks.
    The peso has lost more than 15 percent this year due to
fears a Fed rate hike could spur investors to dump emerging
market assets. The currency has also been hit by the tumbling
price of oil, which underpins Mexican government spending.
    Mexico's central bank is expected on Thursday to raise
borrowing costs for the first time in more than seven years.
 
    The Fed raised the range of its benchmark interest rate by a
quarter of a percentage point to between 0.25 percent and 0.50
percent, ending a lengthy debate about whether the economy was
strong enough to withstand higher borrowing costs. 
    The Colombian peso weakened 0.5 percent oil prices
fell.
    
    Latin American stock indexes and currencies at 0100 GMT:
 Currencies                                      daily %
                                                  change
                                         Latest  
 Brazil real                             3.9227    -1.23
 Mexico peso                             16.973     0.80
 Chile peso                               708.4     0.37
 Colombia peso                          3332.29    -0.52
 Peru sol                                3.3681     0.15
 Argentina peso (interbank)              9.8250    -0.23
                                                 
 Argentina peso (parallel)                14.52    -0.21
                                                 
 
 (Reporting Bruno Federowski and Miguel Angel Gutierrez; Editing
by Dan Grebler and Ken Wills)