SAO PAULO, Sept 27 (Reuters) - Latin American currencies weakened on Wednesday as the market digested comments from Federal Reserve Chair Janet Yellen which seemed to confirm that further U.S. interest rate hikes are coming soon. In an address on Tuesday, Yellen said it would be "imprudent" to keep rates on hold until inflation accelerates to the U.S. central bank's 2 percent target. Her remarks added fuel to growing bets on a December rate hike, apparently contradicting those who believed concerns over the slow pace of inflation would lead the Fed to wait longer to hike rates. U.S. President Donald Trump's plan to slash rates on businesses and the wealthy could also speed up consumer price increases, paving the way for tighter monetary policy.
Higher U.S. rates often drain capital away from higher-yielding, but riskier emerging markets, weighing on their currencies. "The tax plan could boost the American economy, bolstering the U.S. dollar," said Pablo Spyer, director at brokerage Mirae in Sao Paulo. The Brazilian real weakened as much as 1 percent, breaching the threshold of 3.20 per dollar for the first time in a month before paring losses. Currencies in Chile, Mexico and Colombia all slipped between 0.4 percent and 0.8 percent. Brazil's benchmark Bovespa stock index lost ground for a fifth straight session as investors booked profits from a recent rally that drove it to an all-time high earlier this month. Shares in Cia Energética de Minas Gerais SA shed 1.4 percent in volatile trading after Brazil's government sold licenses to operate four hydropower dams previously operated by Brazil's No. 3 power utility.
Key Latin American stock indexes and currencies at 1525 GMT:
Stock indexes Latest Daily YTD pct pct change
MSCI Emerging Markets 1,077.66 -0.23 25.26 MSCI LatAm 2,883.83 -1.18 24.67 Brazil Bovespa 73,595.27 -0.97 22.20 Mexico S&P/BVM IPC 50,004.66 -0.7 9.56 Chile IPSA 5,283.11 0.36 27.26 Chile IGPA 26,394.09 0.38 27.30 Argentina MerVal 25,108.75 -0.23 48.42 Colombia IGBC 11,094.55 0.35 9.54 Venezuela IBC 45,9729.72 6.46 1350.01 Currencies Latest Daily YTD pct pct change
Brazil real 3.1864 -0.65 1.97 Mexico peso 18.0880 -0.75 14.68 Chile peso 637 -0.35 5.29 Colombia peso 2,940.81 -0.74 2.06 Peru sol 3.274 -0.12 4.28 Argentina peso (interbank) 17.5800 0.00 -9.70 Argentina peso (parallel) 18.02 0.17 -6.66
(Reporting by Bruno Federowski, editing by G Crosse)