November 29, 2018 / 2:23 PM / 7 months ago

EMERGING MARKETS-Latam currencies advance on signs of cautious Fed

    By Sruthi Shankar
    Nov 29  (Reuters) - The Mexican peso and Brazilian real
climbed on Thursday, together with most of their emerging market
peers, as the dollar came under pressure a day after the U.S.
Federal Reserve Chairman Jerome Powell eased worries about
swifter interest rate hikes.
    The peso extended overnight gains to touch an
eight-day high against the dollar after Powell said on Wednesday
that U.S. rates were "just below" a so-called neutral level,
leading to bets that a rising trend in U.S. rates may be coming
to an end.
    Investors also shrugged off a warning from Mexico's central
bank on Wednesday about the incoming leftist government's
policies sparking a loss of confidence in the country.

    The Chilean and the Colombian pesos gained as
hopes of moderation in the pace of U.S. interest rate hikes
boosted appetite for risky assets, including emerging markets.
    "The risk of Fed hikes has been dialed back in the wake of
Powell's comments," said Koon Chow, FX strategist at UBP in
London, adding that emerging market currencies have the benefit
of trading at cheap levels.
    The Brazilian real also gained for a third straight
session, reversing earlier losses and building on increases
spurred by its central bank's sale of repurchase agreements to
improve liquidity in the foreign exchange markets.
    Analysts pointed to volatility as traders sought to
influence the month-end Ptax rate that is used as a benchmark
for futures contracts.
    An advance in the real was also capped by concern about a
delay in the Senate vote on a future offshore oil auction that
could raise an estimated 130 billion reais ($33.90 billion).
    Senate President Eunice Oliviera said on Wednesday the
so-called transfer of rights bill was facing resistance from the
current government as a proposal to split the proceeds with
states could violate a government spending cap.
    Brazil's main stock index Bovespa rebounded after
initially opening lower, helped by an 8 percent jump in
Brazilian toll road operator CCR SA after it
announced a deal with Sao Paulo prosecutors to pay 81.53 million
reais ($21.20 million) to settle a case against its
    Key Latin American stock indexes and currencies at 1408 GMT:
 Stock indexes                          daily %  YTD % change
 MSCI Emerging Markets         998.33      0.67         -14.4
 MSCI LatAm                   2609.21      0.97         -8.63
 Brazil Bovespa              89640.02      0.44         17.33
 Mexico IPC                         -         -             -
 Chile IPSA                   5130.47      0.32          0.32
 Argentina MerVal                   -         -             -
 Colombia IGBC                      -         -             -
 Currencies                             daily %  YTD % change
 Brazil real                   3.8506     -0.27        -13.95
 Mexico peso                  20.2222      0.34         -2.59
 Chile peso                     669.5      0.85         -8.19
 Colombia peso                      -         -             -
 Peru sol                           -         -             -
 Argentina peso (interbank)         -         -             -

($1 = 3.8343 reais)

 (Reporting by Sruthi Shankar in Bengaluru, additional reporting
by Claudia Violante in Sao Paulo; Editing by Bernadette Baum)
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