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EMERGING MARKETS-Latam FX sinks ahead of Fed; Chile c.bank seen holding rates

    * Recent oil weakness hurts Mexican, Colombian pesos
    * Weak FDI data hurts Brazil's real
    * Chilean c.bank expected to hold rates

    By Ambar Warrick
    Jan 27 (Reuters) - The Mexican and Colombian pesos led
losses across Latin American currencies on Wednesday amid
uncertainty over U.S. monetary policy, while Chile's peso fell
ahead of a central bank rate decision.
    Recent weakness in the oil market -- driven by concerns over
waning demand due to COVID-19 -- has weighed on the currencies
of crude exporters Mexico and Colombia, with the two
 falling more than 1% each on Wednesday.
    Mexico's peso has sold off this week after President
Andres Manuel Lopez Obrador tested positive for the coronavirus,
sparking criticism of his administration's handling of the
pandemic.
    The country has the fourth-highest death toll in the world
from the virus, with investors calling for more fiscal spending
to offset its economic impact.
    Other Latin American currencies also retreated as investors
switched to safer trades ahead of a monetary policy decision
from the U.S. Federal Reserve, which will shed more light on the
central bank's stance in the face of increased fiscal spending.
    Chile's peso fell about 0.8% against the dollar, with
its central bank expected to hold interest rates at ultra-low
levels.
     "The bank will mention that the economic recovery is
ongoing, but that the balance of risks remain biased to the
downside considering the uncertainty regarding the pandemic,"
Credit Suisse analysts wrote in a note. 
    "The bank will acknowledge that recent inflation has been
slightly higher than expected, but will likely underline that
this has been largely due to transitory effects."
    Chile's central bank has signaled that it intends to keep
rates at 0.5% until 2022.
    Brazil's real dropped 1% after marking its best day
in two weeks. Central bank data showed foreign direct investment
in the country halved in 2020 from the prior year, reflecting
the impact of the pandemic.
    Latin American stocks also retreated, on
track for losses in six of the past seven sessions. 
    
    Key Latin American stock indexes and currencies:
    
                              Latest       Daily % change
 MSCI Emerging Markets         1377.16                 -0.84
                                        
 MSCI LatAm                    2363.29                 -0.94
                                        
 Brazil Bovespa              115829.57                 -0.54
                                        
 Mexico IPC                          -                     -
                                        
 Chile IPSA                    4455.13                 -0.95
                                        
 Argentina MerVal                    -                     -
                                        
 Colombia COLCAP               1402.25                     - Currencies             Latest       Daily % change
 Brazil real                    5.3777                 -1.02
                                        
 Mexico peso                   20.2056                 -1.20
                                        
 Chile peso                      737.7                 -0.75
                                        
 Colombia peso                    3652                 -1.11
 Peru sol                       3.6497                 -0.16
                                        
 Argentina peso                87.1100                 -0.10
 (interbank)                            
                                        
 

 (Reporting by Ambar Warrick in Bengaluru)
  
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