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Latam currencies slip as investors await Powell speech

Aug 22 (Reuters) – Latin American currencies edged lower on Thursday, as investors awaited a speech from the U.S. Federal Reserve chief Jerome Powell for clarity on interest rate cuts after minutes from the latest meeting dimmed hopes of aggressive easing. After riding a rough week on recession worries, financial markets have stabilized in the recent days on hopes that policymakers will support growth in their slowing economies through stimulus measures. U.S. central bank policymakers, however, were skeptical of a series of rate cuts, July minutes released on Wednesday showed, leaving traders to stick to bets of a 25-basis point rate cut at the September meeting. Investors are looking forward to Powell’s speech at Jackson Hole, Wyoming, on Friday to see how far the U.S. central bank is prepared to lower rates, likely setting the tone for markets in the short-term. Leading losses among regional currencies, the Brazilian real fell 0.4% after two straight days of gains. Brazil’s markets were coming off a strong showing on Wednesday, helped by reports President Jair Bolsonaro wanted to privatize state-owned oil company Petrobras before the end of his term in 2022. Shares of power company Eletrobras also soared as the government said it would renew efforts to privatize it. The Bovespa, which gained nearly 2% on Wednesday, was flat. The Mexican peso dropped 0.3% after data showed inflation eased more than expected during the first half of August, likely creating room for the central bank to lower borrowing costs in the coming months. Argentina’s peso steadied at $54.75 per dollar after economic advisors to presidential candidate Alberto Fernandez said they would seek alternatives to the current administration’s austerity measures. The peso shed nearly 18% last week after Fernandez pulled off a major lead over business-friendly President Mauricio Macri in a primary vote, stoking fears of a return to populist policies and battering emerging markets. Latin American stock indexes and currencies at 1348 GMT: MSCI Emerging Markets 978.68 -0.45 MSCI LatAm 2616.33 -0.12 Brazil Bovespa 101153.83 -0.05 Mexico IPC – – Chile IPSA 4780.54 -0.08 Argentina MerVal – – Colombia IGBC – – Currencies Latest Daily % change Brazil real 4.0437 -0.35 Mexico peso 19.7482 -0.31 Chile peso 711.2 0.01 Colombia peso 3373.6 0.32 Peru sol 3.3798 -0.11 Argentina peso 54.6000 0.79 (interbank) (Reporting by Sruthi Shankar in Bengaluru Editing by Nick Zieminski)

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