August 21, 2018 / 3:12 PM / 10 months ago

EMERGING MARKETS-LatAm currencies up on Trump comments, Brazil real slips

    By Bruno Federowski
    BRASILIA, Aug 21 (Reuters) - Most Latin American currencies
strengthened on Tuesday after U.S. President Donald Trump
criticized the head of the Federal Reserve for raising interest
rates, but the Brazilian real weakened due to concerns over the
presidential elections.
    Trump told Reuters in an interview on Monday that he was
"not thrilled" with Fed Chair Jerome Powell's rate hikes and
said the U.S. central bank should do more to help him to boost
the economy.
    His remarks, which seemed to break with the time-honored
standard of central bank autonomy, suggested Trump would like to
keep a lid on the U.S. dollar as part of his efforts to reduce
the U.S. trade deficit.
    High interest rates could draw capital away from
emerging-market economies towards the United States, boosting
the U.S. currency.
    Currencies from Mexico, Chile, Colombia and Peru firmed
between 0.3 percent and 1.4 percent.
    But the Brazilian real weakened 0.7 percent after a
string of voting intention polls showed former São Paulo
governor Geraldo Alckmin, the market's preferred candidate, was
still failing to gain traction.
    "Up to a few days ago, the market was not contemplating a
scenario in which Alckmin is out of a second-round vote, but it
has begun to price that possibility," Nova Futura economist
Pedro Silveira said.
     Alckmin is backed by a wide coalition and has committed to
an agenda of structural reforms and budget cuts. But he has
consistently trailed behind several of his rivals, including
jailed former leftist President Luiz Inácio Lula da Silva and
far-right lawmaker Jair Bolsonaro.
    The benchmark Bovespa stock index slipped 0.1
percent, but shares in Minerva SA soared on reports
that investors were considering taking the beef exporter private
through a tender offer or a capitalization.
    Key Latin American stock indexes and currencies at 1435 GMT:
 Stock indexes                               daily %     YTD %
                                              change    change
 MSCI Emerging Markets              1046.33     1.23    -10.77
 MSCI LatAm                         2509.92     0.05    -11.29
 Brazil Bovespa                    76252.53     -0.1     -0.20
 Mexico IPC                        49163.84     0.78     -0.39
 Argentina MerVal                  26223.42    -0.06    -12.78
 Colombia IGBC                     12119.79     0.37      6.59
 Currencies                                  daily %     YTD %
                                              change    change
 Brazil real                         3.9843    -0.69    -16.84
 Mexico peso                        18.8735     0.66      4.37
 Chile peso                          663.92     0.59     -7.42
 Colombia peso                      2987.86     1.38     -0.20
 Peru sol                             3.296     0.30     -1.79
 Argentina peso (interbank)         29.9000    -0.07    -37.79
 Argentina peso (parallel)             29.8    -0.50    -35.47
 (Reporting by Bruno Federowski
Additional reporting by Claudia Violante in São Paulo; Editing
by Meredith Mazzilli)
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