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EMERGING MARKETS-Brazil real up as c.bank resumes currency intervention
May 16, 2017 / 10:00 PM / 4 months ago

EMERGING MARKETS-Brazil real up as c.bank resumes currency intervention

 (Updates with final prices)
    By Bruno Federowski
    SAO PAULO, May 16 (Reuters) - The Brazilian real
strengthened on Tuesday after the central bank resumed market
intervention, providing support for the currency ahead of a key
vote on pension reform.
    The Brazilian real firmed as much as 0.6 percent
before paring gains to 0.34 percent as traders booked profit on
a six-day stretch of gains.
    The central bank sold $400 million worth of traditional
currency swaps, which correspond to sales of dollars to
investors for future delivery, to roll over June contracts.
    Should it maintain that pace of sales daily throughout the
end of May, as it has done in previous months, it will roll over
all of the $4.4 billion worth of maturing swaps.
    The move comes as the lower house of Congress prepares to
vote on President Michel Temer's flagship revamp of the Brazil's
costly pension system, which investors say is needed to curtail
growth of public debt and stave off recession.
    Traders say the approval may trigger additional strength in
the real, which has failed to rise consistently past 3.10 to the
dollar since early February. Temer said on Monday a vote could
take place by late May, though he still does not have the votes
to pass it at this moment.
    The real's move up also tracked strength in other Latin
American currencies, after weaker-than-expected U.S. housing
figures supported expectations of a slower pace of interest rate
increases in the country, potentially increasing appetite for
riskier emerging-market assets.
    Mexico's peso rose for a sixth straight session,
closing up 0.3 percent at 18.65 per dollar.
    Still, yields on Brazilian interest rate futures contracts
 fell as traders bet the central bank could accelerate
interest rate cuts this month to a brisk 1.25 percent basis
points, taking the benchmark Selic rate to 10 percent.
    Weaker-then-expected economic figures led economists at
Banco BTG Pactual SA to forecast a 125 basis-point cut this
month, followed by 100 basis-point and 75 basis-point reductions
in July and September.
    
    Key Latin American stock indexes and currencies at 2150 GMT:
 Stock indexes                           daily %    YTD %
                                Latest    change   change
 MSCI Emerging Markets          1015.05     0.48    17.72
                                                  
 MSCI LatAm                     2761.44     0.36    17.98
                                                  
 Brazil Bovespa                68684.50     0.31    14.04
                                                  
 Mexico IPC                    49459.62    -0.44     8.36
                                                  
 Chile IPSA                     4875.40    -0.32    17.44
                                                  
 Chile IGPA                    24448.43    -0.26    17.91
                                                  
 Argentina MerVal              21833.61     0.81    29.06
                                                  
 Colombia IGBC                 10826.50     -0.4     6.90
                                                  
 Venezuela IBC                 64415.96     3.73   103.17
                                                  
                                                         
 Currencies                              daily %    YTD %
                                          change   change
                                 Latest           
 Brazil real                     3.0955     0.34     4.97
                                                  
 Mexico peso                      18.65      0.3    11.23
                                                  
 Chile peso                       666.7     0.22     0.61
                                                  
 Colombia peso                  2876.35     0.09     4.35
 Peru sol                         3.265     0.12     4.56
                                                  
 Argentina peso (interbank)      15.565    -0.35     1.99
                                                  
 Argentina peso (parallel)        16.00    -0.50     5.13
                                                  
 
 (Reporting by Bruno Federowski and Miguel Angel Gutierrez;
Editing by Andrea Ricci and David Gregorio)
  

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