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Latam assets rise as focus shifts to Fed

(Updates prices; adds market strategist’s quote) * EM assets up ahead of Powell statement * Latam stocks rise in line with global equities * Argentina’s peso lags Latam FX peers By Agamoni Ghosh Aug 21 (Reuters) – Latin American stocks and currencies rose on Wednesday as investors hoped central bankers around the world convening for an annual symposium held by the U.S. Federal Reserve would signal more concrete measures to counter the rising prospect of a global recession. MSCI’s index of Latin American stocks rose over 1%, tracking a global rally in riskier assets. Minutes from the U.S. Federal Reserve’s last policy meeting released on Wednesday showed that policymakers debated cutting interest rates more aggressively, although they wanted to avoid the appearance of being on a path to more rate cuts. “Although the minutes were closely watched it did not have much of an impact on markets given its take-away is historical now,” said Christian Lawrence, senior FX strategist, Latam at Rabobank. Investors are now looking ahead to the U.S. Federal Reserve’s annual economic symposium in Jackson Hole, Wyoming, starting on Thursday, which will bring together central bankers from around the world. Investors hope that by the symposium’s end central bankers, including Fed Chair Jerome Powell, will have more clues to offer on the interest-rate outlook. “Powell will be careful to not signal the start of an aggressive easing cycle given the Trump rhetoric on the Fed chairman, which could result in rates reacting for a short period of time,” said Lawrence. “But we expect an aggressive policy easing nonetheless, with two more rate cuts by the end of this year.” Sao Paulo-traded stocks rose 0.7% with shares of state-controlled power utility Eletrobras jumping over 12% after Brazilian House Speaker Rodrigo Maia said Congress will renew efforts to privatize the company. The Brazilian real rose 0.6%, leading gains among regional peers, after the central bank sold $200 million in the spot currency market for the first time in a decade. The move is part of the central bank’s recently revised policy of intervening in the foreign exchange market, where it will sell dollars – along with existing sales of reverse currency swaps – to meet rising demand due to market volatility. Mexico’s peso rose 0.3%, while Colombia’s peso scaled a two-week high, getting an additional boost from higher oil prices. Argentina’s stocks attempted a recovery from a 10% fall in the previous session, but the peso fell half a percent. Ratings agency Fitch said on Wednesday that the peso’s steep fall last week will gravely affect investor confidence and re-accelerate inflation with potential for sharper deterioration in economic growth. Key Latin American stock indexes and currencies at 1930 GMT Stock indexes daily % change Latest MSCI Emerging Markets 984.09 0.41 MSCI LatAm 2626.78 1.7 Brazil Bovespa 101217.94 2.01 Mexico IPC 40040.25 0.86 Chile IPSA 4795.92 0.4 Argentina MerVal 27849.62 2.273 Colombia IGBC 12581.67 0.09 Currencies daily % change Latest Brazil real 4.0231 0.66 Mexico peso 19.6932 0.35 Chile peso 711 -0.30 Colombia peso 3380.38 0.74 Peru sol 3.376 0.18 Argentina peso 54.9700 -0.52 (interbank) (Reporting by Agamoni Ghosh in Bengaluru Editing by Leslie Adler)

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