October 26, 2017 / 3:34 PM / a year ago

EMERGING MARKETS-LatAm currencies down on Fed jitters; ECB curbs losses

    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
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
will provide accommodation for a long time.
    Currencies from Brazil, Mexico, Chile
 and Colombia slipped between 0.2 percent and 0.5
    The Brazilian real led the losses 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                               daily %     YTD %
                                              change    change
 MSCI Emerging Markets              1109.88    -0.38      29.2
 MSCI LatAm                         2879.99    -0.12     23.19
 Brazil Bovespa                    76655.49    -0.02     27.28
 Mexico S&P/BVM IPC                49365.53        1      8.16
 Chile IPSA                         5498.08     0.05     32.44
 Chile IGPA                        27578.44     0.04     33.01
 Argentina MerVal                  28085.39     0.74     66.01
 Colombia IGBC                     11002.10     0.42      8.63
 Venezuela IBC                       717.77     0.97    -97.74
 Currencies                                  daily %     YTD %
                                              change    change
 Brazil real                         3.2604    -0.49     -0.34
 Mexico peso                        19.0875    -0.22      8.68
 Chile peso                          629.85    -0.17      6.49
 Colombia peso                       3007.8    -0.34     -0.21
 Peru sol                             3.236    -0.06      5.50
 Argentina peso (interbank)         17.5200    -0.14     -9.39
 Argentina peso (parallel)               18     0.56     -6.56
 (Reporting by Bruno Federowski; Editing by Jonathan Oatis)
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