EMERGING MARKETS-Latam currencies rally on oil spike, dovish Fed
By Bruno Federowski SAO PAULO, Jan 28 (Reuters) - Latin American currencies rallied on Thursday on a spike in oil prices and bets that the U.S. Federal Reserve may wait longer to increase interest rates due to global market volatility. Expectations that major producers might cooperate to cut output lifted oil prices on Thursday, fostering demand for currencies from commodity exporters. Crude prices have fallen by half since May on signs of a growing oversupply of oil. Also boosting demand for riskier assets was a Fed policy statement on Wednesday that highlighted concerns about global markets, which have been hard hit by the recent slump in oil prices and worries about weaker growth in China. A slower pace of U.S. rate hikes this year would benefit emerging market assets, which would remain more attractive relative to bonds from the world's largest economy. "The tone of the statement hints at policy flexibility in the face of a shift in the balance of risks," Scotiabank analysts wrote in a client note. The Colombian peso jumped 2 percent, while the Mexican peso strengthened to its highest level in more than a week. Traders widely expect the Mexican central bank to extend its daily dollar auction program later on Thursday. The Brazilian real also rose, while yields paid on interest rates futures contracts fell as traders bet that the country's central bank could avoid increasing rates for longer than expected. Minutes of the bank's last rate-setting meeting showed most members of the bank's board believe a domestic recession and weakness abroad will help curb inflation. Latin American stock indexes and currencies at 1440 GMT: Stock indexes daily % YTD % change change Latest MSCI Emerging Markets 724.27 1.16 -9.84 MSCI LatAm 1671.88 1.54 -10.01 Brazil Bovespa 38817.39 1.15 -10.46 Mexico IPC 42335.29 0.54 -1.49 Chile IPSA 3549.25 0.09 -3.56 Chile IGPA 17568.29 0.12 -3.21 Argentina MerVal 11090.15 2.81 -5.01 Colombia IGBC 8520.18 1.06 -0.32 Venezuela IBC 14310.86 0.06 -1.90 Currencies daily % YTD % change change Latest Brazil real 4.0519 0.80 -2.59 Mexico peso 18.2725 1.03 -5.71 Chile peso 709.9 0.66 -0.03 Colombia peso 3286.55 2.00 -3.57 Peru sol 3.4651 -0.03 -1.47 Argentina peso (interbank) 13.8500 0.22 -6.26 Argentina peso (parallel) 14.32 0.28 -0.35 (Reporting by Bruno Federowski; Editing by Paul Simao)
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