BRASILIA: Latin American currencies strengthened on Wednesday, a day after US President Donald Trump's Republicans suffered defeat in a special election in Alabama, imposing a possible hurdle to his policy agenda.
Expectations that Trump's efforts to cut taxes and boost infrastructure investments could boost US economic growth and speed up inflation have weighed on investor demand for emerging market assets in recent months.
Quickening inflation could force the Federal Reserve to hike US interest rates more quickly in the coming months, dampening the allure of higher-yielding assets.
But a disappointing US inflation reading put the US dollar on the backfoot on Wednesday and trimmed expectations of US policy tightening going forward.
Currencies from Chile, Mexico and Brazil firmed between 0.2 percent and 1.2 percent, while stock markets jumped.
The US special election result and inflation figures also temporarily seized the spotlight away from the Federal Reserve, which is widely expected to raise interest rates later on Wednesday and could provide clues about the timing of future US policy moves.
Shares of Cosan SA Ind?stria e Com?rcio led gainers on Brazil's benchmark Bovespa stock index after it concluded the acquisition of a stake in natural gas distributor Cia de G?s de Sao Paulo from oil major Royal Dutch Shell PLC.
Phone carrier Oi SA slumped after it reached a deal with two major creditor groups on a plan to recover the company from bankruptcy protection that would give bondholders up to 75 percent of the company's shares.
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