EMERGING MARKETS-Latam currencies strengthen on bets of dovish Fed
By Bruno Federowski SAO PAULO, Jan 27 (Reuters) - Latin American currencies strengthened on Wednesday on bets that global market volatility could lead the U.S. Federal Reserve to strike a cautious tone when announces its decision on interest rates later in the day. Traders widely expect the Fed to stand pat after raising rates for the first time in a decade late last year. A slump in oil prices and growing signs of weakness in China's economy have stoked bets that the Fed could proceed with only one increase later this year. "We believe the Fed will be conservative and keep rates steady for a while," said Ricardo Gomes da Silva, a trader at Correparti brokerage in São José dos Pinhais, Brazil. This could ease the pressure over emerging market currencies, which otherwise could suffer from outflows triggered by higher rates in the world's largest economy. The Mexican peso rose 0.5 percent and the Colombian peso advanced 0.4 percent, despite a resumed decline in oil prices after a brief rebound the day before. The Brazilian real strengthened 0.8 percent in thin trading as investors awaited the release of the minutes of the central bank's last rate-setting meeting. The Brazilian central bank confounded investors last week by leaving its benchmark rate unchanged despite repeatedly dropping hints of an increase. Latin American stock indexes and currencies at 1400 GMT: Stock indexes daily % YTD % change change Latest MSCI Emerging Markets 716.15 1.1 -10.81 MSCI LatAm 1635.58 0.92 -11.43 Brazil Bovespa 37682.86 0.49 -13.07 Chile IPSA 3534.58 -0.17 -3.96 Chile IGPA 17498.47 -0.16 -3.60 Currencies daily % YTD % change change Latest Brazil real 4.0366 0.77 -2.22 Mexico peso 18.3780 0.47 -6.25 Chile peso 714.9 0.36 -0.73 Colombia peso 3346.94 0.41 -5.31 Peru sol 3.463 0.00 -1.41 Argentina peso (interbank) 13.8750 -0.18 -6.43 Argentina peso (parallel) 14.31 0.28 -0.28 (Reporting by Bruno Federowski; Editing by Nick Zieminski)
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