(Updates with final prices after Mexican rate hike)
By Bruno Federowski
SAO PAULO, Nov 17 (Reuters) - Mexico's peso fell on Thursday
after an interest rate increase by the central bank fell short
of expectations for stronger action to counter a slide in the
currency sparked by Donald Trump's U.S. presidential election
win.
The peso dipped 1 percent after the 50-basis-point rate
increase by the central bank. The hike was in line with a
Reuters poll of economists earlier in the week, but by Thursday
the market was tilting toward a bigger rate increase.
"The market was expecting a bit more," said Alfonso Esparza,
a strategist at Oanda in Toronto, who still thought the
50-basis-point hike was the right move because of the risk to
growth from Trump's threat to unwind a free trade deal with
Mexico.
"It is still very early to know what could be the effect of
the new policies of President-elect Trump," he said. "The
central bank could end up risking too much before it really
knows what will happen with Trump's promises."
Elsewhere, comments by Federal Reserve Chair Janet Yellen
that the U.S. central bank could tighten monetary policy
"relatively soon" cemented bets on a December rate hike and
helped send Brazil's stock market and the Colombian peso lower.
The words were Yellen's first public remarks since the
election of Trump as U.S. president last week.
Trump's pledges of heavy spending and lower taxes have
raised concerns that price pressures could force the Fed to
increase rates more quickly than previously expected.
Higher U.S. rates would reduce the allure of high-yielding
emerging market assets, possibly triggering outflows.
Brazil's benchmark Bovespa stock index fell by more
than 1.6 percent and shares in state-controlled oil company
Petróleo Brasileiro SA dipped over 3 percent.
Key Latin American stock indexes and currencies at 2240 GMT:
Stock indexes daily % YTD %
change change
Latest
MSCI Emerging Markets 847.19 0.04 6.68
MSCI LatAm 2272.61 -0.67 24.2
Brazil Bovespa 59770.47 -1.63 37.88
Chile IPSA 4185.71 0.08 13.74
Chile IGPA 20939.45 0.11 15.36
Venezuela IBC 26637.43 1.03 82.60
Mexico IPC 44919.69 0.04 4.52
Currencies daily % YTD %
change change
Latest
Brazil real 3.4189 0.08 15.45
Mexico peso 20.430 -1.05 -15.66
Chile peso 675.00 -0.03 5.14
Colombia peso 3157.6 -0.77 0.37
Peru sol 3.404 0.00 0.29
Argentina peso (interbank) 15.475 0.13 -16.11
Argentina peso (parallel) 15.63 0.19 -8.70
(Reporting by Bruno Federowski; Editing by Daniel Flynn and
Peter Cooney)Our Standards: The Thomson Reuters Trust Principles.