May 22, 2019 / 8:06 PM / a year ago

EMERGING MARKETS-Most Latam FX firm after Fed minutes, Brazil real retreats from gains

 (Updates prices)
    By Susan Mathew
    May 22 (Reuters) - Most Latin American currencies firmed on
Wednesday after minutes of the U.S. Federal Reserve's May
meeting showed members agreeing to maintain their patient stance
"for some time."
    Mexico's peso rose 0.4%, hitting a 2-1/2 week high,
before retreating to trade 0.07% higher, while Colombia's
currency climbed 0.1% as an interest rate hike in the
United States - which usually spurs outflow from riskier
emerging market bets - seemed unlikely in the near future.

    The Mexican peso looked set to extend gains to a third
straight session with Mexican Foreign Minister Marcelo Ebrard
saying he saw a "good chance" that the United
States-Mexico-Canada Agreement (USMCA) trade pact would be
    This comes after Washington struck deals last week to lift
tariffs on steel and aluminum imports from Canada and Mexico,
removing a major obstacle to legislative approval of the pact.
    Stocks in Mexico fell to a more than two-week low,
tracking a decline in world stocks after media reports that
Washington was considering sanctions on Chinese video
surveillance firm Hikvision hit sentiment ahead of a meeting of
the leaders of the two nations.
    "There is a question to what extent the trade war is already
priced in and whether or not EM can stabilize going into the
Trump-Xi summit," analysts at Citi Research wrote in a note.
    Brazil's real was flat, retreating from early gains
of as much as 0.8%, after the government cut 2019 growth
projections to 1.6% from a previous forecast of 2.2%, and raised
this year's inflation forecast. 
    This comes amid deteriorating approval ratings for the
government and lingering uncertainty around the pace in passing
crucial pension reforms. 
    "We believe there's already a fair amount of bad news in FX,
despite expectation of more noise and uncertainty over pension
reform to come. We remain of the view that pension reform will
be approved by the special committee in 1H and by congress this
year," Citi analysts wrote.
    Sao Paulo-traded stocks swung between losses and
gains, last trading flat as gains in consumer stocks countered
losses by financials. 
    Cosmetic maker Natura Cosmeticos SA jumped 6.5%
as it neared an all-stock deal to acquire U.S. company Avon
Products Inc, moving Natura closer to its goal of a
global market.
    Airline Gol Linhas Aereas Inteligentes gained
3.6% after Brazil's lower house of Congress voted to remove the
20% limit on foreign ownership of Brazilian airlines.

    The Chilean currency slipped 0.35% as prices of the
country's main export, copper, slid on trade war woes.
    Key Latin American stock indexes and currencies at 1930 GMT:
    Stock indexes             Latest    Daily %
 MSCI Emerging Markets          998.03     -0.09
 MSCI LatAm                   2,609.60      0.11
 Brazil Bovespa              94,438.79     -0.05
 Mexico IPC                  42,962.06     -0.53
 Chile IPSA                   4,936.08      0.44
 Argentina MerVal            34,557.54      0.22
 Colombia IGBC               12,164.62     -0.48
       Currencies             Latest    Daily %
 Brazil real                    4.0419     -0.09
 Mexico peso                   19.0033      0.01
 Chile peso                      696.9     -0.11
 Colombia peso                3,333.53      0.17
 Peru sol                        3.341     -0.03
 Argentina peso                44.8600     -0.07

 (Reporting by Susan Mathew in Bengaluru;
Editing by Phil Berlowitz)
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