September 5, 2017 / 9:47 PM / a year ago

EMERGING MARKETS-Brazilian real rises as Batista plea deal threatened

 (Updates prices)
    By Bruno Federowski
    SAO PAULO, Sept 5 (Reuters) - Brazil's currency rose on
Tuesday after the country's top prosecutor threatened to
partially revoke a plea deal that has supported corruption
charges against President Michel Temer.
    A diminished chance for a successful prosecution of Temer
could allow the government to focus on its market-friendly
reform agenda, traders said.
    Prosecutor General Rodrigo Janot said that billionaire meat
tycoon Joesley Batista and a fellow state's witness seemed to
have inadvertently recorded a four-hour conversation discussing
crimes not covered in their plea bargain.
    Traders said the news drew fresh scrutiny to the accord and
could delay or weaken new charges that Janot was expected to
bring against Temer in coming weeks. 
    "This should bolster optimism among government allies in
Congress toward a potential approval of pension reform this year
still," traders at Correparti brokerage wrote in a client note.
    The Brazilian real strengthened as much as 0.8
percent to a one-month high, ending the day up nearly 0.6
percent. The cost of insuring against a Brazilian sovereign
default for five years fell to the lowest level
in almost three years.
    The country's benchmark Bovespa stock index briefly
breached the 73,000 milestone for the first time since 2008,
lifted by blue chips such as state-controlled oil company
Petróleo Brasileiro SA, state lender Banco do Brasil
SA and miner Vale SA. But the stock index
closed down about 0.16 percent, under pressure from Wall Street.
    Shares of JBS SA, the meatpacker owned by the
Batista brothers, slumped as much as 10 percent, the biggest
daily decline in 14 weeks. 
    Other Latin American currencies also traded higher after an
influential Federal Reserve policymaker said the U.S. central
bank should be cautious about raising interest rates until it is
confident that inflation will rebound toward the Fed's 2 percent
    A recent string of weaker-than-expected U.S. economic
figures has cast doubt on the Fed's plan to hike rates a third
time this year, fostering demand for high-yielding emerging
market assets.
    Key Latin American stock indexes and currencies at 1953 GMT:
 Stock indexes                                 daily      YTD %
                                 Latest            %     change
 MSCI Emerging Markets               1083.89    0.05      25.64
 MSCI LatAm                          2897.28   -0.14      23.95
 Brazil Bovespa                     72012.82   -0.16      19.57
 Mexico IPC                         50291.22   -1.05      10.18
 Chile IPSA                          5133.18   -0.29      23.65
 Chile IGPA                         25657.50   -0.25      23.75
 Argentina MerVal                   24045.07    1.42      42.13
 Colombia IGBC                      11217.70   -0.17      10.76
 Venezuela IBC                     269781.34    1.95     750.91
 Currencies                                    daily      YTD %
                                                   %     change
                                      Latest  change  
 Brazil real                          3.1185    0.57       4.19
 Mexico peso                         17.9165   -0.23      15.78
 Chile peso                           622.76    0.23       7.70
 Colombia peso                          2929    0.00       2.48
 Peru sol                              3.237    0.00       5.47
 Argentina peso (interbank)          17.2300    0.29      -7.86
 (Reporting by Bruno Federowski; Editing by Dan Grebler and
Leslie Adler)
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