August 12, 2015 / 3:30 PM / 2 years ago

EMERGING MARKETS-Latam FX little changed as traders mull yuan impact on Fed

By Walter Brandimarte
    SAO PAULO, Aug 12 (Reuters) - Latin American currencies
seesawed around their previous closing prices on Wednesday as
traders digested the impact of a recent depreciation of the
Chinese yuan on regional exports and U.S. monetary policy.
    Currencies such as the Mexican peso and the Brazilian
real were supported by bets that a weaker yuan will
complicate monetary policymaking by the U.S. Federal Reserve,
possibly delaying an interest rate hike that could disrupt
capital flows to emerging markets. 
    Most Latin American currencies slid about 1 percent on
Tuesday as China's decision to allow the yuan to weaken fueled a
sharp drop in commodities prices, as well as concerns about the
competitiveness of emerging market exporters.
    While the performance of exporters greatly matters for Latin
American foreign exchange markets, analysts point out that key
currencies in the region have depreciated at least 10 percent
since the beginning of the year.
    A delay in the Fed's rate hike, on the other hand, would
provide an immediate boost to investors' appetite for risky
assets, they say.
    Also supporting the Brazilian real was a decision by Moody's
Investors Service to assign a stable outlook to the country's
rating after cutting it to the near-junk level of Baa3.
 
    Many investors feared the widely-expected downgrade could
come with a negative rating outlook, which would mean Brazil's
coveted investment grade was at risk.

    
    Key Latin American stock indexes and currencies at 1520 GMT:
    
 Stock indexes                                daily %    YTD %
                                               change   change
                                   Latest              
 MSCI Emerging Markets                863.65    -1.66    -8.16
 MSCI LatAm                          2169.09    -1.32   -19.41
 Brazil Bovespa                     48189.71     -1.8    -3.63
 Mexico IPC                         43666.72    -1.61     1.21
 Chile IPSA                          3805.95    -0.79    -1.17
 Chile IGPA                         18547.95     -0.7    -1.71
 Argentina MerVal                   11410.76    -1.61    33.01
 Colombia IGBC                       9744.83      0.2   -16.24
 Venezuela IBC                      15426.38        0   299.78
                                                              
 Currencies                                   daily %    YTD %
                                               change   change
                                      Latest           
 Brazil real                          3.4845     0.34   -23.73
 Mexico peso                         16.3175     0.01    -9.64
 Chile peso                            681.9    -0.10   -11.07
 Colombia peso                       2940.15     0.04   -18.78
 Peru sol                             3.2291    -0.40    -7.75
 Argentina peso (interbank)           9.2300    -0.05    -7.37
                                                       
 Argentina peso (parallel)             14.82     0.07    -5.53
                                                       
 
    

 (Editing by Meredith Mazzilli)

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