EMERGING MARKETS-Brazil's real weakens on swaps outlook; China PMI boosts stocks
SAO PAULO, June 2 (Reuters) - Brazil's real weakened the most in a month on Monday on uncertainty over the future of the central bank's currency intervention program and a worsening outlook for domestic economic growth. Other currencies in the region also weakened slightly, though encouraging economic data from China boosted local thankstocks. The Brazilian real fell to 2.269 per dollar after having spent nearly two months in the 2.20 to 2.25 range, which many traders had seen as an informal trading band enforced by the central bank through daily currency interventions.th After market close on Friday the central bank signaled it would roll over fewer expiring swaps in June than it did in May. Traders have become less certain over the future of the program, which offers currency swaps to investors who wish to hedge themselves against a possible weakening of the real and is slated to last at least until the end of the month. "Given that inflation has started to recede while growth remains tepid, it has become less imperative for the real to remain strong," wrote Citi analyst Kenneth Lam in a client note. The real was further hit by a central bank poll of economists on Monday showing expectations for economic growth at 1.5 percent for 2014, down from 1.63 percent last week. Latin American stocks mostly gained after Purchasing Managers' Index data from China showed signs of an economic revival in Brazil's top trading partner; a key market for local commodities exports such as iron-ore, soybeans and copper. Brazil's Bovespa stock index rebounded off its lowest level in a month, driven by shares of iron-ore mining giant Vale SA, which counts China as its biggest customer. Mexico's IPC index rose its most in three weeks, boosted by a slight improvement in manufacturing data and bargain-hunting after a sharp drop on Friday. Shares of telecommunications firm America Movil rose about 1 percent. The company on Monday that it will offer up to 25 billion pesos ($1.94 billion) in two separate offerings of five and ten-year senior notes. Key Latin American stock indexes and currencies at 1603 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 1028.48 0.08 2.49 MSCI LatAm 3241.01 -0.04 1.3 Brazil Bovespa 51617.6 0.74 0.21 Mexico IPC 41789.39 1.03 -2.19 Chile IPSA 3903.88 0 5.53 Chile IGPA 19091.96 -0.06 4.75 Argentina MerVal 7641.48 -0.91 41.74 Colombia IGBC 13663.57 0 4.53 Peru IGRA 15800.31 0.3 0.30 Venezuela IBC 2156.98 -0.01 -21.18 Currencies daily % YTD % change change Latest Brazil real 2.2685 -1.27 3.89 Mexico peso 12.9105 -0.39 0.93 Chile peso 550.3 -0.13 -4.40 Colombia peso 1901.15 -0.27 1.62 Peru sol 2.773 -0.40 0.72 Argentina peso (interbank) 8.0800 0.00 -19.65 Argentina peso (parallel) 11.41 0.35 -12.36 (Reporting by Asher Levine; editing by Andrew Hay)
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