October 26, 2017 / 11:08 PM / in a year

EMERGING MARKETS-LatAm currencies down on Fed jitters

 (Updates prices)
    By Bruno Federowski
    SAO PAULO, Oct 26 (Reuters) - Latin American currencies
weakened on Thursday on bets that U.S. President Donald Trump
would nominate a more hawkish policymaker to replace Janet
Yellen as head of the Federal Reserve.
    However, losses were limited by the European Central Bank's
decision to extend monetary stimulus, albeit at a slower pace. 
    Politico on Thursday reported that Trump's search for the
next chair of the Fed has come down to Fed Governor Jerome
Powell and Stanford University economist John Taylor. Both are
seen as more hawkish than Yellen.
    The report fanned expectations that U.S. interest rates
could rise faster than expected next year, potentially hampering
demand for high-yielding assets from emerging markets.
    Still, that could be partially offset by the ECB's extended
    The bank will cut its bond buys in half to 30 billion euros 
($34.92 billion) a month from January, taking comfort in an
economic recovery now in its fifth year.
    But, concerned by stubbornly low inflation, the ECB twinned
the cut with a nine-month extension of the program, opting to
buy fewer bonds but for a longer period to reassure investors it
would provide accommodation for a long time.
    Currencies from Brazil, Mexico, Chile
 and Colombia slipped between 0.2 percent and
0.09 percent. 
    The Mexican peso lost 0.87 percent after the U.S. House of
Representatives approved a budget resolution, opening the door
for deep tax cuts that could affect Mexican businesses.

    The Brazilian real shed 0.38 percent after President Michel
Temer dodged corruption charges in a lower house vote on
Wednesday evening, but with a smaller show of support from
lawmakers than a similar vote earlier this year.
    The vote could delay his efforts to pass a pension reform
that is seen as critical to boosting long-term growth in the
country and curbing government debt.    
    Key Latin American stock indexes and currencies at 1500 GMT:
 Stock indexes            Latest        Daily pct    YTD pct
                                           change     change
 MSCI Emerging Markets        1,105.74      -0.75       29.2
 MSCI LatAm                   2,834.27       -1.7      23.19
 Brazil Bovespa              75,899.74      -1.01      26.02
 Mexico IPC                  48,993.96       0.24       7.34
 Chile IPSA                   5,516.45       0.39      32.88
 Chile IGPA                  27,657.71       0.33      33.39
 Argentina MerVal            27,880.54       0.01      64.80
 Colombia IGBC               11,036.77       0.73       8.97
 Venezuela IBC                  716.89       0.85     -97.74
 Currencies                     Latest  Daily pct    YTD pct
                                           change     change
 Brazil real                    3.2965      -0.38      -1.43
 Mexico peso                   19.2120      -0.87       7.97
 Chile peso                      633.8      -0.79       5.82
 Colombia peso                3,015.01      -0.58      -0.45
 Peru sol                         3.24      -0.19       5.37
 Argentina peso                17.6500      -0.88     -10.06
 Argentina peso                   8.03       0.39      -6.71

($1 = 0.8591 euros)

 (Reporting by Bruno Federowski and Julia Love; editing by Diane
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