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Weak oil, copper prices also drag Latam FX

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POLL-Brazil to ease by additional 50 basis points

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Colombia government asks congress to OK up to $17.6 bln

debt

By Ankika Biswas

March 20 (Reuters) - Most Latin American currencies fell

against a strong dollar on Wednesday as investors keenly awaited

policy outcomes from the Federal Reserve and Brazilian central

bank, while the Czech National Bank cut its key rate by 50 basis

points.

The MSCI index for Latam currencies was flat

by 10:20 a.m. ET (1420 GMT) after dropping to a three-week low

on Tuesday, with the dollar index climbing to a fresh

three-week high.

Investors expect the Fed to maintain the policy rate at

5.00%-5.25%, but officials could likely signal later and fewer

cuts than the previous projection of three quarter-point cuts

over the course of the year.

"A likely hawkish stance from the FOMC would further delay

easing expectations, briefly lifting long-term Treasury yields

and pressuring EM currencies. A delayed easing cycle reduces the

incentive of EM central banks to cut aggressively to limit FX

depreciation," said Joaquin Kritz Lara, chief economist at

Numera Analytics.

Weak commodity prices also contributed to weakness in most

of the resource-heavy nations' currencies.

Top copper producers Chile's peso dropped 1% and

Peru's sol lost 0.3% owing to lower prices of the red

metal. Further, Peru's copper production slipped 1.2% in

January.

Major oil exporters Mexico's peso and Colombia's

peso slipped over 0.1% each tracking the decline in the

commodity's prices.

A Reuters poll showed Brazil could ease rates by another 50

basis points later in the day after five consecutive

half-percentage point rate cuts since August. President Luiz

Inacio Lula da Silva has criticized central bank chief Roberto

Campos Neto for hindering economic growth by keeping rates at

the current 11.25%.

The Brazilian real was up 0.2%, bucking the wider

weakness among peers.

Mexico and Colombia will also deliver their policy outcomes

this week.

Meanwhile, the government of President Gustavo Petro asked

Colombia's congress to allow taking on up to $17.6 billion in

debt to finance its development plans.

Elsewhere, Czech National Bank cut its key rate to 5.75%, as

expected, maintaining a steady pace of policy easing with the

crown still weak and lingering price pressures.

Capital Economics analyst Nicholas Farr noted the

post-meeting statement may reiterate easing cycle can be "paused

or terminated at any time", in part to limit pressure on the

crown, while Societe Generale's lead CEEMEA strategist Marek

Drimal remained bearish on the currency, the investment bank's

least favorite CEE currency for upcoming months.

The crown was largely flat against the euro.

Key Latin American stock indexes and currencies:

Stock indexes Latest Daily %

change

MSCI Emerging Markets 1030.35 0.25

MSCI LatAm 2485.98 0.05

Brazil Bovespa 127662.24 0.1

Mexico IPC 55449.77 -0.18

Chile IPSA 6439.40 0.36

Argentina MerVal 0.00 0

Colombia COLCAP 1308.35 0.12

Currencies Latest Daily %

change

Brazil real 5.0175 0.24

Mexico peso 16.8287 -0.16

Chile peso 977.4 -1.16

Colombia peso 3879.95 -0.11

Peru sol 3.701 -0.33

Argentina peso (interbank) 853.0000 0.06

Argentina peso (parallel) 1010 1.49