September 8, 2017 / 4:19 PM / in a year

EMERGING MARKETS-Chile peso falls the most in four months as copper drops

    By Bruno Federowski
    SAO PAULO, Sept 8 (Reuters) - The Chilean peso on Friday
posted its worst daily drop in four months as traders questioned
whether a rally in copper that has underpinned the currency's
recent upswing was justified.
    The peso weakened 1.1 percent to 620 to the dollar,
snapping a string of four straight days of gains but still near
two-year highs.
    The move came on the heels of a decline in prices of copper,
a key export, as traders booked profits on a 20 percent surge
that began in June.
    Analysts have voiced skepticism that the industrial metal
would continue to rise, given signs of stagnant demand from top
consumer China. Chinese data for August showed imports of copper
and copper products held steady for the fourth month in a row.
    Expectations that the Chilean central bank would react to
the peso's recent strength by cutting interest rates also helped
to temper those bullish on the currency, especially following
weaker-than-expected August price figures.
    Still, some remained confident. Nomura strategists
recommended clients bet that the Chilean currency would
outperform the Mexican peso.
    "The sharp increase in copper prices could potentially
front-load the country's process of investment recovery and
accelerate an economic rebound," they wrote in a report.
    The Mexican peso slipped 0.4 percent, driven lower
by higher risk aversion worldwide amid rising geopolitical
tensions surrounding North Korea.
    South Korea braced for the possibility of another missile
test by North Korea on Saturday, the anniversary of its
founding. It marks the occasion each year with a big display of
pageantry and military hardware.
    Tension on the Korean peninsula has escalated as North
Korea's young leader, Kim Jong Un, has stepped up the
development of weapons. It has tested a string of missiles this
year, including one flying over Japan, and conducted its sixth
nuclear test on Sunday.

    Key Latin American stock indexes and currencies at 1530 GMT:
 Stock indexes                              daily %    YTD %
                                             change   change
 MSCI Emerging Markets             1090.60     0.05    26.42
 MSCI LatAm                        2939.60    -0.47    26.18
 Brazil Bovespa                   73144.31    -0.37    21.45
 Mexico S&P/BVM IPC               50046.29     -0.4     9.65
 Chile IPSA                        5095.78    -0.29    22.75
 Chile IGPA                       25497.71    -0.26    22.97
 Argentina MerVal                 23937.84    -1.29    41.49
 Colombia IGBC                    11227.82    -0.16    10.86
 Venezuela IBC                   276638.56     1.21   772.53
 Currencies                                 daily %    YTD %
                                             change   change
 Brazil real                        3.0962     0.16     4.94
 Mexico peso                       17.7405    -0.40    16.93
 Chile peso                          619.7    -1.10     8.23
 Colombia peso                     2908.49    -0.27     3.20
 Peru sol                            3.233     0.03     5.60
 Argentina peso (interbank)        17.2075    -0.04    -7.74
 Argentina peso (parallel)           17.78     0.28    -5.40
 (Reporting by Bruno Federowski; Editing by Lisa Von Ahn)
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