August 24, 2018 / 5:03 PM / a month ago

EMERGING MARKETS-LatAm currencies jump on Fed chair comments, Argentina peso dips

    By Bruno Federowski
    BRASILIA, Aug 24 (Reuters) - Latin American currencies
jumped on Friday after Federal Reserve Chairman Jerome Powell
expressed no surprises in a closely-watched speech, suggesting a
slow-and-steady pace for U.S. interest rate hikes is still in
order.
    The dollar weakened as Powell, speaking in Jackson Hole,
Wyoming, said a gradual approach of raising rates remains
appropriate to protect the U.S. economy and keep job growth as
strong as possible with inflation under control.
    His remarks were largely in line with market expectations,
which currently suggest an interest rate hike in September and
perhaps again in December. Investors who had braced for a
potential hawkish surprise unwound their bets, weakening the
U.S. currency worldwide.
    A slow path of rate hikes would boost the allure of
higher-yielding, emerging market assets. Accordingly, currencies
from Mexico, Brazil, Chile and Colombia firmed between 0.6
percent and 1.4 percent.
    The Chilean and Colombian pesos led the rally, tracking
higher prices of key commodity exports copper and crude oil.
    Oil prices surged 2 percent on Friday amid signs that Iran
sanctions may limit global supply and that a trade war may not
curb China's appetite for U.S. crude.
    Meanwhile, copper clocked its first weekly gain in nearly a
month, though worries about demand are expected to cap gains as
China's trade dispute with the United States drags on.
    But the Argentine peso fell to a new all-time low
even as the central bank once again sold dollars for future
delivery in a bid to stem the currency's selloff.
    The Argentine peso has ranked among the world's
worst-performing currencies this year, weighed down by a weak
economy, high inflation and uncertainty driven by corruption
investigations.
    
 Key Latin American stock indexes and currencies at 1615 GMT:
 Stock indexes                     Latest       Daily  YTD pct
                                                  pct   change
                                               change  
 MSCI Emerging Markets              1,048.20    -0.23    -9.52
 MSCI LatAm                         2,480.75    -0.99   -12.28
 Brazil Bovespa                    76,413.33     1.03     0.01
 Mexico IPC                        49,782.87     0.07     0.87
 Chile IPSA                         5,260.31    -0.16    -0.16
 Argentina MerVal                  25,685.60    -3.16   -14.57
 Colombia IGBC                     12,194.27      0.3     7.24
                                                              
 Currencies                           Latest    Daily  YTD pct
                                                  pct   change
                                               change  
 Brazil real                          4.0968     0.59   -19.12
 Mexico peso                         18.8237     0.96     4.65
 Chile peso                            659.7     1.41    -6.83
 Colombia peso                      2,946.77     1.32     1.20
 Peru sol                               3.29     0.36    -1.61
 Argentina peso (interbank)          30.5600    -0.26   -39.14
                                                       
 Argentina peso (parallel)             31.25    -0.80   -38.46
                                                       
 
 (Reporting by Bruno Federowski, editing by G Crosse)
  
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