EMERGING MARKETS-Latam FX falls as U.S. inflation optimism fizzles out

US Dollar Report

By Susan Mathew , Shreyashi Sanyal

    * Bolsonaro seen as risk factor for Brazil IPO pipeline
    * SoftBank renews LatAm bet, to launch $3 bln investment
fund  

 (Adds comments, bullets, updates prices throughout)
    By Susan Mathew and Shreyashi Sanyal
    Sept 14 (Reuters) - Latin American currencies fell on
Tuesday after tamer-than-expected U.S. inflation data left
questions about the Federal Reserve's next move, with Brazil's
real leading declines in the region. 
    The MSCI's index for Latin American currencies
 fell 0.5%, with Brazil's real down 0.6%
against the dollar.
    While prospects of further interest rate hikes in Brazil
lend some support, tensions ahead of elections next year are
weighing on the real and companies have cited political upheaval
from far-right President Jair Bolsonaro as a new risk factor for
initial public offerings.
    Last week, pro-Bolsonaro marches took place across the
country, with the president calling on Supreme Court Justice
Alexandre de Moraes to step down and said he would no longer
comply with his rulings. He later sought to smooth over the
relationship.
    "In Brazil, the focus will stay on politics and more
specifically on whether the truce between the president and the
Supreme Court will be a lasting one," said economists at
Deutsche Bank. 
    Brazil's central bank is likely to intervene in the currency
market due to seasonal demand for dollars concentrated near the
end of the year, its chief Roberto Campos Neto said.
    Meanwhile, Japan's SoftBank Group renewed its LatAm
bet, launching a $3 billion fund to invest in technology
companies in the region.
    The dollar index, which measures the greenback
against six major rivals, fell up to 0.4% as data showed
underlying U.S. consumer prices rose at their slowest pace in
six months, creating uncertainty about the Fed's stance on
stimulus tapering.
    "While the inflation numbers might be the start of some
'relief' and positive for high beta/risk currencies, we think
the market will need to get through the Fed meeting first before
it can break 'free'," strategists at TD Securities said. 
    Mexico's peso retreated further from four-week highs,
down 0.2%. The currency, which has largely been on an upward
trend, has gained 2.5% over the last 12 sessions. 
    Ratings agency Fitch on Monday warned that Mexico's
weakening governance is raising credit uncertainties, citing
energy, utilities, infrastructure and financial institutions as
the most affected.
    Among stocks, Brazil's BTG Pactual jumped almost
3% on a report that Singapore's state investor GIC Pte Ltd is
investing $421 million into the lender's private equity fund
that controls fiber optic company V.tal. 
    
    Key Latin American stock indexes and currencies at 1908 GMT:
    
        Stock indexes                Latest    Daily %
                                               change
 MSCI Emerging Markets                1295.71    -0.45
 MSCI LatAm                           2412.39    -0.53
 Brazil Bovespa                     116579.75     0.15
 Mexico IPC                          51821.67     0.63
 Chile IPSA                           4409.79     0.19
 Argentina MerVal                    78637.47   -1.784
 Colombia COLCAP                      1307.57    -0.37
                                                      
           Currencies                Latest    Daily %
                                               change
 Brazil real                           5.2534    -0.59
 Mexico peso                          19.9113    -0.23
 Chile peso                             783.9     0.05
 Colombia peso                        3821.74     0.17
 Peru sol                              4.0951     0.02
 Argentina peso (interbank)           98.2100    -0.02
                                               
 Argentina peso (parallel)              179.5     0.84
                                               
 

    
 (Reporting by Susan Mathew and Shreyashi Sanyal in Bengaluru;
Editing by Alexander Smith and Rosalba O'Brien)
  

Our Standards: The Thomson Reuters Trust Principles.

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