November 28, 2018 / 10:09 PM / 21 days ago

EMERGING MARKETS-Latam currencies gain on Fed comments, Mexican shares rise 3 pct

 (Rewrites throughout with market details, updates prices)
    By Susan Mathew
    Nov 28 (Reuters) - Most Latin American currencies firmed on
Wednesday, as speculation that the cycle of U.S. interest rate
hikes may be petering out hit the dollar and bolstered risk
appetite, which also supported regional stocks.
    U.S. Federal Reserve chair Jerome Powell said the Fed's
policy rate is now "just below" a level that neither brakes nor
boosts a healthy economy.            
    "We've seen broad gains in risk assets as his speech was
interpreted as dovish. It was interpreted as suggesting fewer or
slower pace of rate hikes," said Alejo Czerwonko, emerging
markets strategist at UBS Global Wealth Management's Chief
Investment Office.
    Investors welcome any indication of easing in the pace of
U.S rate hikes as the steady move higher in the official rate of
return for holding U.S. dollars has sucked money out of
high-yielding bets in the developing world this year.
    The Mexican peso gained the most against the
greenback among regional currencies, rising 1 percent and 
posting its best day in eight weeks, despite the central bank
cutting the economic growth forecast range and raising the
forecast range for inflation.
     Christian Lawrence, a senior market strategist with
Rabobank said markets may be shrugging off central bank targets
as "this moves growth closer to market expectations. So I think
if anything, this was expected "
    Brazil's real climbed, supported also in part by the
central bank's sale of billions in dollar repurchase agreements,
aimed at providing liquidity to the market.
    Rabobank's Lawrence says these sales may continue in the
near term as uncertainty remains, especially regarding pension
reforms. 
    The incoming government which is set to take office in
January has promised pension reforms to reduce the budget
deficit.  
    Among stocks, Mexican shares which have been
underperforming since October, closed 3 percent higher.
    Uncertainty over trade with Canada and the United States,
and more recently worries over the next government's policies
have whacked Mexican assets since October.
    Brazil stocks rose 1.6 percent and hit their highest
in four weeks with only energy shares dragging as they tracked
oil prices lower.
    Iron ore miner Vale was the biggest boost as
price of the steel-making ingredient rose.
    Meanwhile, the Colombian peso and stocks
fell. The country's government is set to present to congress a
tax reform bill with about half its original revenue target,
leaving it struggling to cut spending or alter fiscal goals and
find ways to satisfy credit rating agencies.
      
    Latin American stock indexes and currencies at 2131 GMT:
 Stock indexes                           daily %     YTD %
                             Latest       change    change
 MSCI Emerging Markets          991.67      1.17     -14.4
                                                  
 MSCI LatAm                    2584.12      1.81     -8.63
                                                  
 Brazil Bovespa               89250.82      1.55     16.82
                                                  
 Mexico IPC                   40970.74      2.92    -16.99
                                                  
 Chile IPSA                    5114.16     -0.27     -0.27
                                                  
 Argentina MerVal             31138.66       0.7      3.57
                                                  
 Colombia IGBC                11982.52     -0.15      5.38
                                                  
                                                          
 Currencies                              daily %     YTD %
                                          change    change
                                Latest            
 Brazil real                    3.8495     -0.24    -13.93
                                                  
 Mexico peso                   20.2710      0.98     -2.82
                                                  
 Chile peso                      675.2     -0.03     -8.97
                                                  
 Colombia peso                    3266     -0.13     -8.70
 Peru sol                        3.374      0.21     -4.06
                                                  
 Argentina peso                38.4500      0.36    -51.63
 (interbank)                                      
                                                  
 Argentina peso                  36.25      2.07    -46.95
 (parallel)                                       
                                                  
 

 (Reporting by Susan Mathew in Bengaluru; editing by Grant
McCool)
  
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