July 27, 2016 / 3:57 PM / 2 years ago

EMERGING MARKETS-Latam currencies weaken ahead of Fed policy decision

SAO PAULO, July 27 (Reuters) - Latin American currencies
weakened on Wednesday as traders adopted a cautious stance ahead
of a U.S. Federal Reserve policy decision later in the day.
    Investors widely expected the U.S. central bank to leave
rates untouched, but growing expectations that it could increase
them this year have reduced demand for emerging market assets.
    "A surprise in the tone of the policy statement could boost
the value of the dollar," analysts with Guide Investimentos
brokerage wrote in a client note.
    Markets were mostly unfazed by news that Japan will announce
a $265 billion stimulus package next week, ramping up pressure
for the central bank to announce complementary monetary easing
following a meeting later this week. 
    Both the Mexican  and Colombian pesos 
weakened about 0.5 percent, weighed down by a drop in prices of
    Brazil's benchmark Bovespa stock index rose for a
fourth straight day as traders digested a fresh round of
corporate reports.
    Units of Santander Brasil SA inched up 0.4
percent after the bank posted stronger-than-expected
second-quarter profit amid tentative signs of recovery in Latin
America's biggest economy. 
    In a conference call, executives said the lender could
gradually disburse more loans and possibly seek an acquisition.
    Shares of Telefónica Brasil SA advanced 1.5
percent, their biggest daily increase in two weeks. Credit
Suisse analysts raised their price target for the stock after
the phone carrier raised its outlook for cost savings.
    Telefónica Brasil reported on Tuesday lower profit second
quarter profit but higher Ebitda, citing higher-than-expected
synergies from its acquisition of broadband carrier GVT.
    Key Latin American stock indexes and currencies at 1550 GMT:
 Stock indexes                               daily %   YTD %
                                              change  change
 MSCI Emerging Markets               873.89     0.36    9.64
 MSCI LatAm                         2363.10     0.15   28.95
 Brazil Bovespa                    56964.67     0.32   31.41
 Mexico IPC                        47200.74     0.58    9.83
 Chile IPSA                         4158.41     0.24   12.99
 Chile IGPA                        20528.75     0.25   13.10
 Argentina MerVal                  15573.99    -1.16   33.39
 Colombia IGBC                      9756.93     0.39   14.15
 Venezuela IBC                     12096.30    -1.09  -17.08
 Currencies                                  daily %   YTD %
                                              change  change
 Brazil real                         3.2889    -0.58   20.01
 Mexico peso                        18.8830    -0.52   -8.75
 Chile peso                           664.8    -0.57    6.75
 Colombia peso                       3074.3    -0.41    3.09
 Peru sol                             3.359    -0.06    1.64
 Argentina peso (interbank)         14.9600    -0.03  -13.22
 Argentina peso (parallel)            15.51     0.13   -7.99
 (Reporting by Bruno Federowski and Paula Arend Laier; Writing
by Bruno Federowski; Editing by Jonathan Oatis)
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