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Chile interest rate decision awaited

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Latam stocks index down 1.7%

By Shashwat Chauhan

May 22 (Reuters) - Most currencies in resources-rich

Latin America fell against a broadly firmer dollar on Wednesday

as commodities such as copper and crude oil lost steam, while

Chile's peso lagged peers ahead of an expected interest rate

cut.

Chile's peso, the currency of the world biggest

copper producer, shed 1.8% against the dollar with prices of red

metal coming under pressure as funds locked in profits from a

rally to record highs that has curbed industrial consumers'

appetite to buy the metal.

Later in the day, Chile's central bank is widely expected

cut its interest rate by 50-basis points to 6%. The bank slashed

the rate by 75-bps at its last meeting.

"I'm curious to see if they really need to add any

additional stimulus to the economy because you're starting to

see credit growth bottom out and some measures of inflation

possibly turning as well," said Mike Arno, EM portfolio manager

at Brandywine Global.

Fellow copper producer Peru's sol also fell 0.6%.

Meanwhile, the dollar index firmed in the lead-up to

the release of minutes from the Federal Reserve's latest policy

meeting.

In recent days, a number of Fed policymakers have said the

U.S. central bank should wait several more months to ensure that

inflation really is on track to hit its 2% target before cutting

interest rates.

"We will see some softening inflation over the next few

prints, which should be supportive of the Fed cutting rates,

which would be supportive of risk assets," Arno added.

Brazil's real dipped 0.8%, while currencies of oil

producing nations also came under pressure amid declines crude

prices.

Mexico's peso shed 0.2%, while Colombia's peso

lost 0.4%.

Brazil's Finance Minister Fernando Haddad said he is afraid

that the climate tragedy in Rio Grande do Sul will be used as an

argument in favor of monetary tightening, stating that the

current level of the Selic rate is still very restrictive.

Most South American stock indexes also dipped, with MSCI's

index for Latin American stocks down 1.8%,

hitting a three-week low.

Brazil's Bovespa fell around 1% and Mexican shares

lost 0.8% a day after an over 1% fall, while Colombia's

benchmark index was down over 1% as well.

HIGHLIGHTS

** Emerging market credit ratings are finally looking up

again

** Venezuela opposition tugs on heartstrings in unusual

presidential campaign

Key Latin American stock indexes and currencies:

Stock indexes Latest Daily % change

MSCI Emerging Markets 1094.99 0.15

MSCI LatAm 2441.58 -1.72

Brazil Bovespa 126214.18 -0.94

Mexico IPC 56319.79 -0.78

Chile IPSA 6716.72 0.09

Argentina MerVal 1565917.41 -0.961

Colombia COLCAP 1426.23 -1.01

Currencies Latest Daily % change

Brazil real 5.1603 -0.86

Mexico peso 16.6522 -0.19

Chile peso 903.8 -1.84

Colombia peso 3832.22 -0.38

Peru sol 3.7372 -0.51

Argentina peso 889.5000 0.00

(interbank)

Argentina peso 1220 0.82

(parallel)