January 23, 2018 / 10:17 PM / a month ago

EMERGING MARKETS-LatAm currencies weaken on U.S. protectionism fears

 (Updates prices)
    By Bruno Federowski
    BRASILIA, Jan 23 (Reuters) - Latin American currencies
weakened on Tuesday as concerns over potential U.S.
protectionism lifted the U.S. dollar from an early-year selloff.
    U.S. President Donald Trump slapped steep tariffs on
imported washing machines and solar panels on Monday, measures
that some feared could be just the beginning of a wider
protectionist swing. 
    China and South Korea condemned the measure, with Seoul set
to complain to the World Trade Organization (WTO) over the
"excessive" move.
    The increased tensions drove traders to book profits on
risky assets, fearful that the tariffs could weigh on global
growth. High-yielding assets had kick-started the year with a
rally in the wake of stronger-than-expected activity figures
worldwide.
    "Risk aversion appears to be dominating as market
participants consider the implications of an escalation in trade
tensions between the U.S. and China," analysts at Scotiabank
wrote in a client note.
    The Mexican, Colombian and Chilean
pesos all weakened. 
    Mexico's currency was particularly vulnerable to
protectionism talk as negotiations over the North American Free
Trade Agreement (NAFTA) dragged on.
    A Reuters poll showed the peso would take a bigger hit if
U.S. President Donald Trump kills NAFTA than from an election
victory for the country's left-wing presidential hopeful.

    Meanwhile, investors in Brazil were cautious ahead of the
trial of former President Luiz Inácio Lula da Silva, who is
leading voting intention polls for this year's elections.
    Lula has vowed to reverse part of President Michel Temer's
reform agenda if elected, but he could be barred from running if
a higher court upholds his conviction for corruption at trial on
Wednesday.
    Brazil's Bovespa stock index fell 1.22 percent on
profit-taking after recent highs. Shares in iron ore miner Vale
 dropped 4.17 percent. 
    
    Key Latin American stock indexes and currencies at 2155 GMT:
    
 Stock indexes               Latest          Daily   YTD pct
                                               pct    change
                                            change  
 MSCI Emerging Markets          1,251.71      1.07      6.91
                                                    
 MSCI LatAm                     3,049.07     -1.29      9.22
 Brazil Bovespa                80,678.35     -1.22      5.60
 Mexico IPC                    50,295.03      0.64      1.91
 Chile IPSA                     5,799.81     -0.48      4.23
 Chile IGPA                    29,154.83     -0.45      4.20
 Argentina MerVal              33,939.67      1.24     12.89
 Colombia IGBC                 12,065.52      0.73      6.11
 Venezuela IBC                  2,520.32      4.33    -92.05
                                                            
 Currencies                       Latest     Daily   YTD pct
                                               pct    change
                                            change  
 Brazil real                      3.2340      0.11      2.45
 Mexico peso                     18.7225     -0.20      5.22
 Chile peso                       608.82     -0.65      0.96
 Colombia peso                  2,856.05     -0.20      4.41
 Peru sol                          3.219     -0.19      0.56
 Argentina peso (interbank)      19.3350     -0.97     -3.80
                                                    
 Argentina peso (parallel)         19.83     -0.15     -3.03
                                                    
 
 (Reporting by Bruno Federowski; Editing by Jonathan Oatis, Nick
Zieminski and Cynthia Osterman)
  
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