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EMERGING MARKETS-Latam FX sinks as dollar holds high after Fed

    * Mexican peso, Brazilian real down more than 1% 
    * Fed holds policy unchanged
    * Weak FDI data hurts Brazil's real
    * Chilean c.bank expected to stand pat on rates 

 (Updates after Fed decision)
    By Ambar Warrick and Susan Mathew
    Jan 27 (Reuters) - Mexico's peso and Brazil's real lost more
than 1% on Wednesday as the dollar held gains after the U.S
Federal Reserve kept its policy unchanged.
    The Fed left its key overnight interest rate near zero and
made no change to its monthly bond purchases, noting the pace of
the recovery in economic activity and employment in the United
States from a pandemic induced trough has moderated in recent
months. 
    The expected decision caused minimal moves in currencies,
with the dollar at its best percentage gain in two weeks, while
Mexico's peso lost 1.3%, having pulled slightly back from
one-month lows hit earlier in the session.
    "I think if anything the dollar is finding support from the
Fed's more cautious message," said Joe Manimbo, senior market
analyst, Western Union Business Solutions, Washington. 
    "Its more that the 'risk off' move today has gained traction
in the Fed's more cautious outlook for growth."
    Brazil's real slid 1.5% with weak foreign direct
investment data weighing, while top copper producer Chile's peso
 extended losses to a fourth straight session as declining
prices of the red metal added to the currency's woes.
    Chile's central bank is expected to hold interest rates at
ultra-low levels at its meeting on Wednesday. 
     "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. 
    In line with Wall Street, most main Latam stocks indexes
fell, with Colombia's COLCAP hitting its lowest in
more than a month.
    Brazil's Bovespa, meanwhile, broke a five-day losing
streak with oil stocks and financials leading losses. 
    Cielo SA was the top gainer on the index after
the payments processor unveiled plans to launch a credit
business this year, while also looking at the sale of non-core
assets.

    Key Latin American stock indexes and currencies:
  Stock indexes           Latest   Daily %
                                   change
 MSCI Emerging Markets    1372.71    -1.16
                                   
 MSCI LatAm               2350.30    -1.48
                                   
 Brazil Bovespa         117265.05     0.69
                                   
 Mexico IPC              44302.58    -1.67
                                   
 Chile IPSA               4418.21    -1.77
                                   
 Argentina MerVal        50188.19    1.464
                                   
 Colombia COLCAP          1373.98    -2.02
                                   
                                          
      Currencies          Latest   Daily %
                                   change
 Brazil real               5.4022    -1.47
                                   
 Mexico peso              20.2490    -1.41
                                   
 Chile peso                 739.3    -0.96
                                   
 Colombia peso            3604.13     0.21
                                   
 Peru sol                  3.6438     0.00
                                   
 Argentina peso           87.1100    -0.10
 (interbank)                       
                                   
 
 (Additional reporting by Karen Brettell in New York; editing by
Diane Craft)
  
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