February 1, 2018 / 10:41 PM / a year ago

EMERGING MARKETS-LatAm currencies up; rally undeterred by hawkish Fed

 (Updates prices, adds pending pension reform in Brazil and
Chile interest rate decision)
    By Bruno Federowski
    SAO PAULO, Feb 1 (Reuters) - Latin American currencies
turned mostly higher on Thursday as hawkish remarks from the
Federal Reserve failed to derail a month-long rally fueled by
investors' appetite for risk.
    In its policy statement on Wednesday, the Fed left U.S.
interest rates unchanged but bolstered expectations that they
would continue to rise by saying inflation was likely to
accelerate this year.
    Those comments initially led to losses in emerging market
currencies, which offer higher yields, but the sell-off proved
    Instead, traders focused on Friday's key U.S. payrolls
report, which is likely to offer additional hints on whether
stubbornly slow inflation is accelerating toward the central
bank's target.
    Currencies from Brazil, Mexico and Colombia
 firmed between 0.05 percent and 1.35 percent, extending a
rally underpinned by expectations of accelerating global growth.
    Stock indices also rose throughout the region, except
Argentina and Venezuela, although gains were somewhat muted.
    Brazil's benchmark Bovespa stock index rose 0.69
percent as a decline in shares of lender Banco Bradesco SA
 kept a lid on gains.
    Bradesco forecast fast loan book growth this year but more
pressure on margins, disappointing investors. Goldman Sachs
analysts called the company's predictions "conservative."

    Also in Brazil, the overhaul of the country's social
security system to reduce its burden on the government's
overdrawn accounts still does not have enough support in
Congress, a senior official said on Thursday.
    The pension reform bill is the cornerstone of President
Michel Temer's efforts to reduce Brazil's budget deficit and is
due to be put to a first vote in the lower house in the week of
Feb. 19.
    In Chile, the central bank voted unanimously on Thursday to
keep its benchmark interest rate unchanged at 2.5
percent at its monthly policy meeting. The vote was in line with
market expectations.
    Key Latin American stock indexes and currencies at 2155 GMT:
 Stock indexes               Latest      Daily pct    YTD pct
                                            change     change
 MSCI Emerging Markets         1,248.65      -0.47       7.79
 MSCI LatAm                    3,227.04       0.91       14.1
 Brazil Bovespa               85,495.24       0.69      11.90
 Mexico IPC                   50,591.15       0.27       2.51
 Chile IPSA                    5,862.57       0.12       5.35
 Chile IGPA                   29,465.12       0.15       5.30
 Argentina MerVal             34,641.37      -0.85      15.22
 Colombia IGBC                12,323.23       1.73       8.38
 Venezuela IBC                 3,187.34      -13.1     152.33
 Currencies                      Latest  Daily pct    YTD pct
                                            change     change
 Brazil real                     3.1668       0.05       4.63
 Mexico peso                    18.3570       1.35       7.31
 Chile peso                      597.35       0.00       2.90
 Colombia peso                 2,793.05       1.30       6.77
 Peru sol                         3.211       0.00       0.81
 Argentina peso (interbank)     19.3500       1.55      -3.88
 Argentina peso (parallel)        19.88       0.35      -3.27
 (Reporting by Bruno Federowski; editing by Diane Craft)
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