September 17, 2019 / 2:55 PM / 7 months ago

EMERGING MARKETS-Latam currencies slump, stocks teeter ahead of central bank meetings

    By Agamoni Ghosh
    Sept 17 (Reuters) - Latin American currencies slumped on
Tuesday as investors shied away from riskier assets ahead of key
central bank meetings, while concerns over geopolitical tensions
stemming from attacks on Saudi oil facilities lingered.     
    Oil prices dropped sharply after a Saudi Arabian source told
Reuters that production could be fully back on line within
weeks, quicker than initially thought, but sentiment was still
fragile over the threat of retaliation for the attacks. 
    MSCI's index of Latin American currencies
fell 0.8% with Chile's peso raking up the biggest losses.
    Investors were also on the fence ahead of the U.S. Federal
Reserve's two-day policy meeting beginning on Tuesday. The Fed
is expected to cut interest rates for the second time this year.
    Focus was also on Brazil's central bank meeting this week
when officials are widely expected to cut record-low rates by 50
basis points in order to shore up Latin America's largest
economy. The real fell 0.5%. 
    "Low inflation, subdued activity and continued fiscal
consolidation progress bode well for a 50bp policy rate cut this
week," said Gustavo Rangel, chief economist, Latam at ING in a
    "An additional 50bp cut that brings the SELIC rate
(overnight rate) to 5% in October is also likely, but we expect
a mid-cycle pause after that."
    Colombia's peso shed 0.5%, while Mexico's peso traded
flat after the government said it will uphold its pledge to keep
fuel prices stable despite attacks on Saudi oil sites.

    Stock indices in the region tread water with Mexico's IPC
index the only notable gainer, up 0.3% as investors
returned from a long weekend. 

    Latin American stock indexes and currencies at 14:26 GMT
 Stock indexes                              daily % change
 MSCI Emerging Markets             1017.03           -0.98
 MSCI LatAm                        2693.89           -0.57
 Brazil Bovespa                  103624.64           -0.05
 Mexico IPC                       42970.57             0.3
 Chile IPSA                        5039.46            -0.6
 Argentina MerVal                        -             -
 Colombia IGBC                    13013.63           -0.03
 Currencies                                 daily % change
 Brazil real                        4.0960           -0.18
 Mexico peso                       19.4484           -0.04
 Chile peso                         715.46           -0.86
 Colombia peso                     3378.05           -0.48
 Peru sol                           3.3438           -0.32
 Argentina peso                    56.4250           -0.26

 (Reporting by Agamoni Ghosh in Bengaluru)
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