July 29, 2019 / 3:10 PM / 4 months ago

EMERGING MARKETS-Latam currencies drop ahead of Fed meet; Stocks muted

    * Markets priced for U.S. rate cut, eye Fed guidance
    * Brazil c.bank seen cutting rates to record low 
    * Peru markets shut for local holiday  

    By Agamoni Ghosh
    July 29 (Reuters) - Latin American currencies fell on Monday
and most regional stock indexes crawled slightly higher, as the
U.S. dollar strengthened and investors awaited clues this week
from the Federal Reserve meeting on monetary policy. 
    MSCI's index of Latin American currencies
fell for a third-straight session with Brazil's real
shedding 0.6%.
    Interest rate futures are fully priced for a quarter-point
rate cut from the Fed on Wednesday. Investors will keep tabs on
what the U.S. central bank flags for the future. 
    "The 25 bps cut is already priced in so it will require more
than that for the markets to lift off from here, possibly a more
dovish rhetoric or hints at future rate cuts," said Christian
Lawrence, senior Latam FX strategist, Rabobank.  
    Central banks in emerging markets including those in South
Africa, Russia and Turkey have already cut key interest rates in
the past fortnight, with Brazil's central bank expected to
follow suit.   
    Economists polled by Reuters expect the Banco Central to cut
its benchmark interest rate to a record low on Wednesday to
revive a sagging economy and bring inflation back up toward
    Brazil, Latin  America's largest economy, is struggling to
emerge from a crippling recession, with the government focused
on passing through Congress a pension overhaul it hopes will
prop up public finances and kick-start growth.
    Among other currencies Argentina's peso and
Colombia's peso made prominent moves, falling between
0.6% and 1.2% amid low trade volumes for currencies in the
    Most regional stock indexes edged higher. Sao Paulo-traded
stocks were flat, while Mexican stocks rose 0.2%.
    Mexican President Andres Manuel Lopez Obrador said the
country was not in recession and the economy was performing
increasingly well, rejecting concerns that it may have
contracted for two consecutive quarters.
    Markets in Peru were shut for a local holiday. 
 Key Latin American stock indexes and currencies at 1450 GMT
 Stock indexes                          daily %
                           Latest        change
 MSCI Emerging Markets         1044.16    -0.43
 MSCI LatAm                    2858.32     0.05
 Brazil Bovespa              102978.89     0.16
 Mexico IPC                   40744.60     0.17
 Chile IPSA                    4990.78     0.19
 Argentina MerVal             42205.32    0.528
 Colombia IGBC                12819.83    -0.12
 Currencies                             daily %
 Brazil real                    3.7907    -0.51
 Mexico peso                   19.0850    -0.26
 Chile peso                        697    -0.30
 Colombia peso                 3252.75    -0.66
 Peru sol                            -        -
 Argentina peso                43.8000    -1.05
 (Reporting by Agamoni Ghosh in Bengaluru; Editing by David
Nuestros Estándares:Los principios Thomson Reuters
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