November 17, 2016 / 12:23 AM / a year ago

EMERGING MARKETS-Latam currencies seesaw on Trump policy uncertainty

By Bruno Federowski
    SAO PAULO, Nov 16 (Reuters) - Latin American currencies
seesawed on Wednesday as concerns over a potential global trade
shock under U.S. President-elect Donald Trump gave way to
uncertainty over the policies he will pursue.
    The Mexican peso strengthened just 0.29 percent to
20.2175 per dollar after losing nearly 9 percent last week, its
worst week since October 2008.
    Some traders bet the selloff was overdone, though the peso
is widely seen as the currency that is most vulnerable to U.S.
political developments.
    Trump has pledged to review the terms of trade accords and
curtail relations with Mexico.
    Credit Suisse strategists revised their forecasts for the
peso to account for Trump's victory. They now expect it to
weaken to 23 to the dollar in three months and 25 in twelve
months, from 18.5 and 19.0 previously.
    "We believe the peso is now stepping into uncharted
territory, with all the uncertainty that this entails," analysts
led by Shahab Jalinoos wrote in a report.
    The Mexican central bank will announce its interest rate
decision on Thursday. Many analysts expect it to hike rates by
50 basis points to help curb financial market volatility and
avoid price pressure stemming from a weaker peso.
    The Brazilian real strengthened 0.37 percent to
3.4193 per dollar, supported by heavy central bank and National
Treasury market intervention. 
    Brazil's benchmark Bovespa stock index rose past the
60,000 milestone once again, supported by miner Vale 
and Fibria SA, the world's largest producer of
eucalyptus pulp.
    Brazilian markets did not open on Tuesday, when demand for
emerging markets rebounded, due to a local holiday.
    Key Latin American stock indexes and currencies at 2147 GMT:
 Stock indexes                             daily %     YTD %
                               Latest       change    change
 MSCI Emerging Markets            847.15      0.67      6.68
 MSCI LatAm                      2287.87      1.44     25.03
 Brazil Bovespa                 60759.32      1.85     40.16
 Mexico IPC                     44901.57     -0.27      4.48
 Chile IPSA                      4182.48      0.71     13.65
 Chile IGPA                     20915.76      0.55     15.23
 Argentina MerVal               16520.85      0.25     41.50
 Colombia IGBC                   9642.00     -0.09     12.81
 Venezuela IBC                  26365.40      2.99     80.73
 Currencies                                daily %     YTD %
                                            change    change
 Brazil real                      3.4193     0.37      15.43
 Mexico peso                    20.2175      0.29     -14.78
 Argentina peso (interbank)      15.5000      0.13    -16.24
 Argentina peso (parallel)          15.6      0.38     -8.53

 (Editing by Chris Reese; editing by Diane Craft)
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