(Recasts; updates prices) By Bruno Federowski SAO PAULO, Dec 14 (Reuters) - Latin American currencies weakened on Wednesday after the Federal Reserve hiked U.S. interest rates for the first time this year, and signaled a faster pace of increases in 2017 amid promises of tax cuts, spending and deregulation by President-elect Donald Trump.
The dollar index hit 102.350 - its highest level since early January 2003 - after the U.S. central bank raised the target federal funds rate by 25 basis points to between 0.50 percent and 0.75 percent and projected three more rate hikes next year, up from two as of September.
Mexico's peso lost nearly 1 percent to close at 20.47 pesos per dollar. The country's benchmark IPC index fell to its lowest level since Nov. 10.
Other Latin American currencies seesawed before settling lower on news of the Fed's revised forecasts for future rate moves. The Brazilian real lost 1.12 percent to close at 3.37 per greenback, while the Chilean peso lost 0.72 percent to close at 655.50.
Still, investors in Brazil showed growing confidence that the government would manage to pass austerity measures after the country's Senate approved a constitutional amendment limiting growth of public spending for the next 20 years, a victory for President Michel Temer's efforts to curb debt.
A recent rally by the real allowed the central bank to reduce its intervention after selling traditional currency swaps, which function like dollar sales to investors for future delivery, daily since Dec. 1.
Key Latin American stock indexes at 2102 GMT: Stock indexes Latest Daily pct YTD pct change change MSCI Emerging Markets 867.75 -1.08 10.46 MSCI LatAm 2,273.18 -2.63 27.59 Brazil Bovespa 58,212.12 -1.8 34.28 Mexico IPC 46,220.54 -1.39 7.55 Chile IPSA 4,229.75 -1 14.93 Chile IGPA 21,134.43 -0.9 16.43 Argentina MerVal 16,918.41 -1.62 44.91 Colombia IGBC 9,905.59 -0.74 15.89 Venezuela IBC 32,579.33 -6.89 123.33 (Reporting by Bruno Federowski, editing by G Crosse)