January 30, 2018 / 4:33 PM / a year ago

EMERGING MARKETS-LatAm currencies mostly down ahead of Fed policy statement

    By Bruno Federowski
    SAO PAULO, Jan 30 (Reuters) - Latin American currencies
mostly weakened on Tuesday ahead of a Federal Reserve policy
meeting this week that could bolster expectations of higher U.S.
interest rates going forward.
    The Fed will publish its policy statement on Wednesday
following a two-day meeting. Some economists expect it to raise
its economic assessment, which would strengthen expectations of 
the U.S. central bank raising interest rates four times this
    Higher U.S. rates could weigh on demand for emerging market
assets, which typically offer higher yields.
    Traders also avoided risky assets ahead of U.S. President
Donald Trump's first State of the Union address later on
    "Trade, immigration, and infrastructure are the most highly
anticipated areas of focus. Foreign policy will also be closely
scrutinized as market participants look to comments on North
Korea, Iran, and potentially Russia," analysts at Scotiabank
wrote in a client note.
    Currencies from Brazil, Mexico, Chile
 and Colombia weakened between 0.3 and 0.6
    Stocks also fell in the region in the wake of risk-aversion,
with MSCI's Latin American index down 1.3
    Blue-chips led the decline, with Brazilian lender Itaú
Unibanco Holding SA subtracting the most points from
the benchmark Bovespa stock index.
    Shares of wood pulpmaker Fibria Celulose SA,
however, rose 2 percent after its operating profit nearly
tripled in the third quarter from the year before.
    Fibria executives on Tuesday denied that the company or its
shareholders were discussing a potential tie-up with rival
Eldorado Brasil Celulose SA, but underscored their  interest in
eventual deals in the sector.

    Key Latin American stock indexes and currencies at 1610 GMT:
 Stock indexes                                daily %    YTD %
                                               change   change
 MSCI Emerging Markets               1247.65     -1.6     9.45
 MSCI LatAm                          3155.59    -1.29    13.04
 Brazil Bovespa                     83985.53    -0.84     9.93
 Mexico IPC                         50219.69    -0.82     1.75
 Chile IPSA                          5837.31    -0.73     4.90
 Chile IGPA                         29323.84    -0.66     4.80
 Argentina MerVal                   33904.77    -2.54    12.77
 Colombia IGBC                      12260.74    -1.03     7.83
 Currencies                                   daily %    YTD %
                                               change   change
 Brazil real                          3.1838    -0.59     4.07
 Mexico peso                         18.6775    -0.28     5.47
 Chile peso                            605.8    -0.42     1.46
 Colombia peso                       2846.19    -0.36     4.77
 Peru sol                              3.216    -0.03     0.65
 Argentina peso (interbank)          19.5950    -0.03    -5.08
 Argentina peso (parallel)             19.98     0.25    -3.75
 (Reporting by Bruno Federowski
Editing by Chizu Nomiyama)
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