EMERGING MARKETS-Brazil real stems losses as cenbank ups swap offer
SAO PAULO, June 3 (Reuters) - Brazil's currency, the real, stemmed the previous session's losses on Tuesday after the central bank upped the amount of currency swaps auctioned to roll over expiring contracts. Other Latin American currencies were mixed, while the region's stocks posted modest gains. Brazil's real had fallen sharply on Monday, dropping 1.57 percent to 2.275 per dollar, after the central bank rolled over fewer expiring swaps than it had in previous sessions. Investors had taken the change as a signal that the bank would cut the pace of rollover auctions going forward. The bank did an about-face on Tuesday, doubling the number of swaps offered to 10,000. The swaps are used by investors who wish to hedge themselves against a possible weakening of the real. The real initially strengthened on Tuesday though pared gains to trade little-changed in the afternoon. Uncertainty over the pace of the swap program, which is slated to last at least until the end of the month, has left investors without a clear view of the currency's direction. "Today the currency won't return all its losses from yesterday because it's still up in the air whether (the central bank) will extend this rollover rhythm through the month," said Camila Abdelmalack, an economist with CM Capital Markets in Sao Paulo. At its current level, the real remains above what many traders had considered an informal trading band of 2.20 reais to 2.25 reais per dollar being enforced by the central bank through currency interventions. "The central bank is much more interested in containing volatility than targeting a particular level in spot," wrote Citi analyst Kenneth Lam in an investor note. Latin American stocks were mostly higher, boosted by encouraging Purchasing Managers' Index data from key regional trade partner China. Brazil's Bovespa stock index rose for the second straight day, though gains were limited by a 2 percent drop in meatpacker JBS SA after the company's U.S.-based Pilgrim's Pride Corp unit upped its offer to purchase processed foods maker Hillshire Brands Co. The Bovespa notched its biggest net inflow of foreign funds in nearly 30 months in May, exchange operator BM&FBovespa SA said on Tuesday. Analysts have attributed the inflows to encouraging corporate earnings and investor optimism over an improvement in economic policy following October's presidential elections. Key Latin American stock indexes and currencies at 1646 GMT: Stock indexes Latest daily % YTD % change change MSCI Emerging Markets 1034.54 0.49 2.67 MSCI LatAm 3249.09 0.18 1.33 Brazil Bovespa 51850.76 0.47 0.67 Mexico IPC 41982.61 0.11 -1.74 Chile IPSA 3908.83 0.45 5.67 Chile IGPA 19095.71 0.35 4.77 Argentina MerVal 7739.01 0.79 43.55 Colombia IGBC 13765.44 0.75 5.31 Peru IGRA 15771.25 0.2 0.11 Venezuela IBC 2170.75 0.64 -20.68 Currencies daily % YTD % change change Latest Brazil real 2.2746 0.02 3.61 Mexico peso 12.944 -0.24 0.66 Chile peso 549.7 0.42 -4.29 Colombia peso 1898.69 0.15 1.75 Peru sol 2.778 -0.07 0.54 Argentina peso (interbank) 8.0900 -0.06 -19.75 Argentina peso (parallel) 11.56 -0.69 -13.49 (Reporting by Tiago Pariz, Priscila Jordao and Asher Levine; Editing by Nick Zieminski)
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