October 11, 2017 / 4:39 PM / a year ago

EMERGING MARKETS-LatAm currencies up on doubts over Trump tax plan

    By Bruno Federowski
    SAO PAULO, Oct 11 (Reuters) - Latin American currencies
strengthened on Wednesday as doubts that President Donald Trump
would push through his planned tax reforms fueled bets that U.S.
interest rates will rise more slowly than expected.
    Trump's public feud with Tennessee Senator Bob Corker, an
influential fellow Republican, raised concern among investors
that his push for a tax-code overhaul could be harmed.

    Many investors say the tax changes could boost the U.S.
economy and generate inflationary pressures, potentially driving
the Federal Reserve to accelerate rate-hiking. That would likely
reduce the allure of high-yielding assets, weighing on the value
of emerging market currencies.
    Investors will look for further clues over the future path
of U.S. monetary policy in the minutes of the Fed's latest
policy meeting set for release on Wednesday.
    "The document will likely reinforce the arguments of the
last policy statement, corroborating bets on a December hike,"
economists at SulAmérica Investimentos wrote in a report.
    The currencies of Brazil, Chile, Mexico
 and Colombia firmed between 0.1 and 0.6 percent.
    Brazil's benchmark Bovespa stock index slipped 0.5
percent as investors booked profits from the previous day's
gains, when it hit an all-time high.
    Shares of for-profit college operator Kroton Educacional SA
 led the decline after reporting a 1 percent decline
in the number of students in its undergraduate programs.
Analysts at Banco BTG Pactual highlighted "worrying signs" of
increasing dropouts.
    "2018 is expected to feature a higher level of graduating
students, which combined with the worrying retention dynamics
seen in 2017 could result in downward revisions to student base
forecasts," they wrote.
    Key Latin American stock indexes and currencies at 1625 GMT:
 Stock indexes                                daily %    YTD %
                                     Latest    change   change
 MSCI Emerging Markets               1117.33     0.43    29.02
 MSCI LatAm                          2952.46    -0.44    26.69
 Brazil Bovespa                     76508.61    -0.51    27.03
 Mexico S&P/BVM IPC                 50121.96     0.28     9.81
 Chile IPSA                          5475.46    -0.03    31.89
 Chile IGPA                         27392.36    -0.03    32.11
 Argentina MerVal                   27297.96     0.74    61.36
 Colombia IGBC                      11060.39    -0.05     9.21
 Venezuela IBC                        532.30     0.22   -98.32
 Currencies                                   daily %    YTD %
                                               change   change
 Brazil real                          3.1669     0.52     2.60
 Mexico peso                         18.7220     0.60    10.80
 Chile peso                            626.5     0.40     7.06
 Colombia peso                       2954.19     0.10     1.60
 Peru sol                              3.258     0.18     4.79
 Argentina peso (interbank)          17.4225     0.01    -8.88
 Argentina peso (parallel)              17.8     0.34    -5.51
 (Reporting by Bruno Federowski; Editing by James Dalgleish)
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