December 15, 2016 / 12:53 AM / 7 months ago

EMERGING MARKETS-Latam stocks, currencies fall as U.S. hikes rates

3 Min Read

(Recasts; updates prices)
    By Bruno Federowski
    SAO PAULO, Dec 14 (Reuters) - Latin American currencies
weakened on Wednesday after the Federal Reserve hiked U.S.
interest rates for the first time this year, and signaled a
faster pace of increases in 2017 amid  promises of tax cuts,
spending and deregulation by President-elect Donald Trump.
    The dollar index hit 102.350 - its highest level
since early January 2003 - after the U.S. central bank raised
the target federal funds rate by 25 basis points to between 0.50
percent and 0.75 percent and projected three more rate hikes
next year, up from two as of September.  
    Mexico's peso lost nearly 1 percent to close at
20.47 pesos per dollar. The country's benchmark IPC index
 fell to its lowest level since Nov. 10.
    Other Latin American currencies seesawed before settling
lower on news of the Fed's revised forecasts for future rate
moves. The Brazilian real lost 1.12 percent to close at
3.37 per greenback, while the Chilean peso lost 0.72
percent to close at 655.50.
    Still, investors in Brazil showed growing confidence that
the government would manage to pass austerity measures after the
country's Senate approved a constitutional amendment limiting
growth of public spending for the next 20 years, a victory for
President Michel Temer's efforts to curb debt. 
    A recent rally by the real allowed the central bank to
reduce its intervention after selling traditional currency
swaps, which function like dollar sales to investors for future
delivery, daily since Dec. 1.
    
    Key Latin American stock indexes at 2102 GMT:
 Stock indexes              Latest    Daily pct   YTD pct
                                       change     change
 MSCI Emerging Markets        867.75      -1.08      10.46
                                                 
 MSCI LatAm                 2,273.18      -2.63      27.59
                                                 
 Brazil Bovespa            58,212.12       -1.8      34.28
 Mexico IPC                46,220.54      -1.39       7.55
 Chile IPSA                 4,229.75         -1      14.93
 Chile IGPA                21,134.43       -0.9      16.43
 Argentina MerVal          16,918.41      -1.62      44.91
 Colombia IGBC              9,905.59      -0.74      15.89
 Venezuela IBC             32,579.33      -6.89     123.33
 
 (Reporting by Bruno Federowski, editing by G Crosse)

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