February 12, 2019 / 2:29 PM / a year ago

EMERGING MARKETS-Latam currencies rise as trade optimism boosts risk appetite

    Feb 12 (Reuters) - Latin American currencies strengthened on
Tuesday, in line with other emerging market peers, with Brazil's
real on course to break a seven-session losing streak as
investors' appetite for riskier assets increased and the
dollar's rally lost steam.
    A tentative deal by U.S. lawmakers to avoid another federal
government shutdown, and hopes that U.S. and Chinese officials
would make progress in talks to end a bitter trade dispute
between the two nations supported risk sentiment.
    The Mexican and Chilean pesos climbed 0.3
percent each, while Brazil's real jumped 1 percent after
having lost 3 percent over the last seven trading sessions,
which was its longest losing streak in five years.
    "The issue of a possible agreement between China and U.S.
would bring a more positive tone ... and the exchange rate ends
up reflecting this optimism," said Denilson Alencastro, an
economist at Geral Investimentos.
    Amid growing worries about rising corporate debt, falling
inflation and weaker global economic growth, a Bank of America
Merrill Lynch February survey showed that fund managers named
emerging markets as the most crowded trade for the first time.

    Minutes of the Brazilian central bank's meeting this month
showed that inflation risks in the South American nation
moderated, but threats to domestic and global economic growth
    "The minutes refer to a gradual recovery and to acceleration
hinging on structural measures," Mauricio Oreng, senior Brazil
strategist at Rabobank, said in a note. 
    "In our view, those elements suggest a lack of urgency by
the bank's board to add monetary stimulus as the monetary policy
committee see their monetary stance already in expansionary
territory," he said.
    The central bank kept interest rates unchanged at its
February meeting. Oreng sees rates on hold until next year, with
more of a chance of a further delay in the hiking cycle than of
imminent rate cuts.
    Brazilian stocks were set to post their best day in
two weeks on Tuesday, with most sectors posting gains. Shares of
state oil company Petroleo Brasileiro, or
Petrobras, led the gains.
    Higher oil prices and the company's plan to sell 3.6 billion
reais ($966.60 million) in non-convertible debentures boosted
its climb.
    Key Latin American stock indexes and currencies at 1352 GMT:
    Stock indexes             Latest    Daily %
 MSCI Emerging Markets         1041.29      0.57
 MSCI LatAm                    2849.86      1.45
 Brazil Bovespa               95281.06      0.92
 Mexico IPC                          -         -
 Chile IPSA                    5372.58     -0.05
 Argentina MerVal                    -         -
 Colombia IGBC                       -         -
       Currencies             Latest    Daily %
 Brazil real                    3.7224      1.03
 Mexico peso                   19.2472      0.27
 Chile peso                      659.5      0.30
 Colombia peso                       -         -
 Peru sol                            -         -
 Argentina peso                      -         -

($1 = 3.7244 reais)

 (Reporting by Susan Mathew in Bengaluru and Lais Martins in Sao
Editing by Paul Simao)
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