September 18, 2017 / 10:07 PM / a year ago

EMERGING MARKETS-LatAm currencies weaken ahead of Fed meeting

 (Updates with final prices)
    By Bruno Federowski
    SAO PAULO, Sept 18 (Reuters) - Latin American currencies
weakened on Monday as traders focused on this week's meeting of
the U.S. Federal Reserve, which is expected to announce it will
begin trimming its massive portfolio.
    Investors widely bet that at the end of its two-day meeting
on Wednesday, the Fed will take its next step in winding down
the massive stimulus it introduced to fight the financial
    The U.S. central bank may also offer additional hints about
when it intends to raise interest rates again, after a string of
mixed economic data cast doubt over its plan to hike for a third
time this year.
    For years, high-yielding emerging market currencies have
benefited from steady investor demand as policymakers pumped
money into developed economies to bring borrowing costs down.
    That could fade in coming months as monetary policy returns
to pre-crisis standards, although most investors expect the 
change to take place very slowly.
    "Luckily for emerging markets, global monetary policy
conditions remain amply accommodative in the form of low
interest rates by historical standards, and policy normalization
should be very gradual in the coming quarters," BNP Paribas
economists wrote in a report.
    The Brazilian real and the Mexican peso both
slipped more than 0.5 percent. Their moves echoed the U.S.
dollar's widespread climb in the wake of a rise in U.S. Treasury
    Brazil's benchmark Bovespa stock index, however, 
rose past the 76,000 milestone for the first time as hopes that
President Michel Temer would implement market-friendly reforms
poured additional fuel onto last week's rally.
    Shares of miner Vale SA tracked iron ore prices
higher, adding the most points to the index. Steelmakers
followed, with Usinas Siderúrgicas de Minas Gerais SA
rising more than 7 percent.
    JBS SA fell 3.95 percent after the head of state
bank BNDES said the family calling the shots at the world's
largest meatpacker was unfit to run it. The Batista family had
named founder José Batista Sobrinho as chief executive officer
after his sons were charged with insider trading.
    Key Latin American stock indexes and currencies at 2045 GMT:
 Stock indexes                              daily %    YTD %
                                             change   change
 MSCI Emerging Markets             1112.92     0.98    29.07
 MSCI LatAm                        2994.14     0.21    27.92
 Brazil Bovespa                   75990.41     0.31    26.17
 Mexico S&P/BVM IPC               50258.42     0.67    10.11
 Chile IPSA                        5202.05     0.81    25.31
 Chile IGPA                       25973.23     0.73    25.27
 Argentina MerVal                 23913.92     0.84    41.35
 Colombia IGBC                    11168.19     0.08    10.27
 Venezuela IBC                   423393.47     6.52  1235.41
 Currencies                                 daily %    YTD %
                                             change   change
 Brazil real                        3.1356    -0.67     3.62
 Mexico peso                       17.7600    -0.56    16.80
 Chile peso                          624.9     0.05     7.28
 Colombia peso                      2905.7    -0.30     3.30
 Peru sol                            3.244     0.12     5.24
 Argentina peso (interbank)         17.105    -0.76    -7.19
 Argentina peso (parallel)           17.87    -0.45    -5.88
 (Reporting by Bruno Federowski; Editing by Lisa Von Ahn and Dan
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