August 21, 2019 / 2:14 PM / a month ago

EMERGING MARKETS-Latam currencies firm as focus turns to Fed

    By Sruthi Shankar
    Aug 21 (Reuters) - Latin American currencies rose on
Wednesday, with the dollar on the defensive as investors looked
forward to hints from the U.S. Federal Reserve chief about
possible interest rate cuts.
    The Brazilian real rose 0.6%, leading gains among
regional peers, after the central bank sold $200 million in the
spot currency market for the first time in a decade.
    In a previously announced move, the central bank said it
would sell dollars - along with existing sales of reverse
currency swaps - to meet rising demand due to global market
volatility.
    The real hit session low after central bank chief Roberto
Campos Neto said the balance of economic risks and increasingly
benign inflation means there is scope to cut interest rates
further.
    Sao Paulo-listed shares rose 0.5%, helped by banking
and energy stocks. Shares in state-owned oil firm Petrobras
 gained nearly 2% as crude prices jumped after
industry data showed a larger than expected drop in U.S. crude
inventories.  
    Mexico's peso gained 0.4% even as data showed Mexican
retail sales fell 0.5% in June, compared with the previous
month.
    The broad rise in emerging market assets came ahead of the
release of minutes from the Fed's July meeting, when
policymakers cut interest rate for the first time in a decade.
    Of more interest will be Fed chief Jerome Powell's speech at
the Jackson Hole symposium later this week, as investors look
for clues on further rate cuts, particularly after the U.S. bond
market moves last week suggested a recession in the world's
largest economy is on the horizon.
    "Markets may be too optimistic in pricing more than 25bp for
the September meeting and the upcoming Jackson Hole conference
could end up being a disappointment for markets that expect
central bank action to support risk sentiment once again,"
Morgan Stanley analysts wrote in a note.
    Argentina's peso edged 0.5% lower following a late
recovery on Tuesday after the central bank poured $112 million
of its reserves into dollar auctions.
    A jump in oil prices helped Colombian peso, while the
 Chilean peso held steady.  

    Latin American stock indexes and currencies at 1918 GMT:
    
   Stock indexes           Latest    Daily %
                                     change
 MSCI Emerging Markets       983.09      0.3
                                     
 MSCI LatAm                 2592.63     0.38
                                     
 Brazil Bovespa            99689.09     0.47
                                     
 Mexico IPC                       -        -
                                     
 Chile IPSA                 4790.27     0.28
                                     
 Argentina MerVal                 -        -
                                     
 Colombia IGBC             12608.34      0.3
                                     
                                            
      Currencies           Latest    Daily %
                                     change
 Brazil real                 4.0316     0.45
                                     
 Mexico peso                19.7115     0.25
                                     
 Chile peso                   708.8     0.01
                                     
 Colombia peso              3395.86     0.28
                                     
 Peru sol                    3.3748     0.21
                                     
 Argentina peso             54.9605    -0.55
                                     
 

 (Reporting by Sruthi Shankar in Bengaluru
Editing by Marguerita Choy)
  
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