February 20, 2019 / 10:26 PM / in 3 months

EMERGING MARKETS-Latam FX weaker as dollar firms after Fed minutes

 (Recasts throughout, updates prices, adds market analyst's
    By Aaron Saldanha
    Feb 20 (Reuters) - Most Latin American currencies softened
on Wednesday against the dollar after minutes from the U.S.
Federal Reserve's latest policy meeting turned out to be less
dovish than expected, while a drop in Brazilian shares offset
gains in other Latam stocks.
    The dollar rose after the Fed minutes showed the central
bank had not entirely ruled out the prospect of raising interest
rates in 2019.
    The Fed continues to leave open the door to a rate hike in
the coming months, contrary to financial markets' expectation
that U.S. borrowing costs would not rise this year, CI Banco
analyst James Salazar wrote in a research note.
    MSCI's index of Latin American stocks fell
0.5 percent, pulled lower by Brazilian equities.
    Emerging market assets fell sharply in 2018, as the dollar
strengthened on the back of Fed rate hikes and fears that the
U.S.-China trade war would crimp global economic growth.
    Mexico's peso weakened 0.4 percent. Trading volumes
surged to about 180 percent of their average level over the past
week, following the Fed minutes' release, data on Refinitiv
Eikon showed.
    Mexican stocks tacked on half a percent, as Cemex
 gained 2.8 percent after announcing the sale of some
European assets for about $385 million.
    The cement maker said it would use proceeds from the deal to
cut its debt load, as it seeks to regain its investment-grade
    Brazil's real dipped 0.1 percent while Sao
Paulo-traded stocks fell 1.1 percent, with losses in
most sectors except materials.
    While the government's pension reform proposal made its way
to the country's congress, market participants believed most of
the optimism had been already priced in.   
    The yield spread on local, 10-year Brazilian bonds
 over their U.S. peers hit its widest in
more than a week during the session.    
    Argentina's stocks benchmark rose 0.6 percent, with
energy firm YPF SA riding higher oil prices to
notch a 1.3 percent gain.
    The local peso sank to a more than 4-1/2-month low
before paring losses. 
    Argentina's central bank, which has been snapping up dollars
over the past month, reversed gears as it intervened in futures
markets to shore up the peso.
    A rise in copper prices supported Chile's
peso, which firmed 0.4 percent, while local stocks
 tacked on half a percent.    
    Key Latin American stock indexes and currencies at 2134 GMT
 Stock indexes                                          daily %
                                            Latest       change
 MSCI Emerging Markets                        1049.32      1.19
 MSCI LatAm                                   2882.68      -0.5
 Brazil Bovespa                              96544.81     -1.14
 Mexico IPC                                  43178.00      0.53
 Chile IPSA                                   5410.50      0.45
 Argentina MerVal                            36503.51      0.58
 Colombia IGBC                               12008.20     -0.12
 Currencies                                             daily %
 Brazil real                                   3.7301     -0.08
 Mexico peso                                  19.2217     -0.43
 Chile peso                                     652.8      0.37
 Colombia peso                                 3109.4      0.16
 Peru sol                                       3.318     -0.06
 Argentina peso (interbank)                   39.6500     -0.91
 (Reporting by Aaron Saldanha in Bengaluru; Editing by Richard
Nuestros Estándares:Los principios Thomson Reuters
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