September 13, 2017 / 5:36 PM / a year ago

EMERGING MARKETS-LatAm currencies ease as U.S. producer prices rise

    By Bruno Federowski
    SAO PAULO, Sept 13 (Reuters) - Latin American currencies
weakened on Wednesday after U.S. producer prices rebounded in
August, sparking bets on accelerating inflation that could drive
the Federal Reserve to raise U.S. interest rates again this
    A surge in the cost of gasoline drove U.S. producer prices
0.2 percent higher in August after slipping 0.1 percent in July,
and there were also signs of a pickup in underlying producer
    The increase fueled expectations that consumer inflation
data due on Thursday could surpass analysts' expectations,
bringing some comfort to the U.S. central bank that the pace of
price hikes may be advancing toward its target of 2 percent.
    Inflation has lagged expectations for months despite signs
of labor market tightening, puzzling Fed policymakers and
casting doubts over its stated plan of hiking rates for a third
time this year. Should it follow through with those plans, that
could hamper investor demand for high-yielding emerging market
    The Mexican peso and the Brazilian real
slipped 0.3 percent. Chile's peso led the region's
losses, dropping nearly 1 percent as it tracked a decline in
copper prices.
    Brazil's benchmark Bovespa stock index rose 0.2
percent, but stayed off all-time highs reached on Tuesday.
    Traders were somewhat cautious after Brazil's top court
approved a new graft probe against President Michel Temer for
suspected corruption involving a decree regulating the country's
    The investigation could delay his efforts to implement
market-friendly reforms, which are seen by investors as critical
to boosting long-term growth in Latin America's largest economy.
    Shares in JBS SA jumped 2.1 percent in volatile
trading after police detained its chief executive officer,
saying he used insider information to avoid hefty losses related
to a plea bargain signed earlier this year.
    Traders said the move could accelerate a change in command
that may help the world's largest meatpacker lick the wounds
from a massive corruption scandal.
    Key Latin American stock indexes and currencies at 1720 GMT:
 Stock indexes                    Latest       Daily  YTD pct
                                                 pct   change
 MSCI Emerging Markets             1,098.21    -0.37    27.83
 MSCI LatAm                        2,953.38    -0.68    27.04
 Brazil Bovespa                   74,663.83     0.17    23.97
 Mexico S&P/BVM IPC               50,237.61    -0.48    10.07
 Chile IPSA                        5,176.19     0.14    24.69
 Chile IGPA                       25,861.22     0.11    24.73
 Argentina MerVal                 23,668.30     0.59    39.90
 Colombia IGBC                    11,162.90    -0.33    10.22
 Currencies                          Latest    Daily  YTD pct
                                                 pct   change
 Brazil real                         3.1383    -0.31     3.53
 Mexico peso                        17.7905    -0.33    16.60
 Chile peso                           627.8    -0.92     6.83
 Colombia peso                     2,910.82    -0.08     3.12
 Peru sol                             3.239    -0.19     5.40
 Argentina peso (interbank)         17.0650     0.09    -6.97
 Argentina peso (parallel)            17.77     0.62    -5.35
 (Reporting by Bruno Federowski, editing by G Crosse)
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